HSBC reports Q3 2021 earnings

HSBC on Monday reported third-quarter earnings that handily beat expectations and introduced plans for a share buyback of as much as $2 billion.

The financial institution's reported pre-tax revenue for the third quarter jumped 75.8% from a yr in the past to $5.4 billion. Analyst estimates compiled by the financial institution had anticipated a 22.8% on-year bounce in reported pre-tax revenue to $3.776 billion.

HSBC stated it launched round $700 million of money that was beforehand put aside to arrange for an increase in mortgage losses because the world financial system was weighed down by the Covid-19 pandemic. That contributed to the improved earnings, whereas all areas the financial institution operates in have been worthwhile through the quarter, it stated.

The financial institution's shares in Hong Kong jumped 1% when buying and selling resumed after the lunch break.

"While we retain a cautious outlook on the external risk environment, we believe that the lows of recent quarters are behind us," Noel Quinn, HSBC's group chief government, stated in a press release accompanying the earnings launch.

Meanwhile, reported income for the third quarter was $12 billion — 0.7% larger than a yr in the past. Analyst estimates compiled by HSBC had pointed to a 3.1% on-year improve in income to $12.3 billion.

Here are the opposite highlights of the financial institution's third-quarter monetary report card:

  • Net curiosity margin, a measure of lending profitability, was 1.19% — in contrast with 1.2% within the second quarter.
  • Common fairness tier 1 ratio — which measures the financial institution's capital in relation to its property — was 15.9%, in contrast with 15.6% within the second quarter.
  • Basic earnings per share was 18 cents, in contrast with 17 cents within the second quarter and seven cents within the third quarter of 2020.

HSBC didn’t announce any dividends for the third quarter. But the financial institution stated it plans to start out a share buyback of as much as $2 billion "shortly."

Ewen Stevenson, HSBC's group chief monetary officer, stated the financial institution's capital place has been "very strong." He stated the financial institution needs to scale back its capital ratio to round 14% to 14.5% by the top of subsequent yr.

"We don't want to sit on excess capital if we have it, and hence the $2 billion buyback," Stevenson instructed CNBC's "Capital Connection" after the earnings launch.

Evergrande issues

HSBC stated in its earnings launch that as of Sept. 30, it had no direct credit score publicity to Chinese builders within the "red" class and restricted publicity to these within the "orange" class.

The financial institution was referring to the Chinese authorities's "three red lines" coverage that was rolled out to restrict an organization's debt in relation to its money flows, property and capital ranges.

Chinese property big Evergrande has a giant debt downside – right here's why it mattersCNBC Explains

Stevenson stated HSBC is "very comfortable" with its place in China's actual property sector. He was responding to CNBC's query in regards to the financial institution's publicity to embattled developer Evergrande.

"We are reasonably conservative in our approach to lending to that sector, have been for some time," stated Stevenson.

"We are going to be cautious but I think overall we are comfortable with where we stand in relation to our exposure to the sector, and whatever fallout that comes from there," he added.

Reuters reported that HSBC's publicity to the Chinese actual property sector was round $19.6 billion.

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