HSBC beat estimates on profit and revenue last quarter as net interest income rose, sending shares up by 4.6%.
Profit before tax was US$7.30 billion, down from $8.48 billion year-over-year due to legal expenses but above HSBC-compiled estimates of $5.98 billion. Revenue was $17.79 billion, up from $17.00 billion and beating estimates of $17.05 billion.
“We are becoming a simple, more agile, focused bank, built on our core strengths,” said HSBC CEO Georges Elhedery.
“The intent with which we are executing our strategy is reflected in our performance this quarter, despite taking legal provisions related to historical matters. The positive progress we are making gives us confidence in our ability to upgrade our targets and we now expect 2025 RoTE [return on tangible equity] excluding notable items to be mid-teens, or better.”
Net interest income rose 15% to $8.78 billion, which the company credited to deposit growth and a $300 million loss one year ago from the early redemption of legacy securities.
Income from its Wealth segment surged 30% to $2.68 billion. Wholesale Transaction Banking income fell 2% to $2.61 billion.
HSBC’s profit before tax saw a $1.4 billion hit from legal provisions. This includes allocations for a potential payout over a 2009 lawsuit against HSBC’s Luxembourg business seeking the return of cash and securities allegedly lost in Bernie Madoff’s investment fraud scheme.
Diluted earnings per share were $0.28, down from $0.34.
Adjusted annualised return on tangible equity was 16.4%, up from 12.3% one year ago. Its common equity tier 1 capital ratio was 14.5%, down from 14.6%.
The company’s 2025 outlook expects adjusted return on tangible equity in at least the mid-teens, and a similar mid-teens percentage in 2026 and 2027. It said earlier this month that it aims to privatise its subsidiary Hang Seng Bank, which is projected to close in the first half of 2025.
HSBC’s (LSE: HSBA) share price closed at UK£1,050.20, up from its previous close at £1,004.00. Its market capitalisation is £180.30 billion.
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