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(Alliance News) - HSBC Holdings PLC on Monday reported that quarterly profit more than doubled, but fell short of market expectations, as it prepared to launch a USD3 billion share buyback.
Asia-focused, London-based HSBC said third-quarter pretax profit soared to USD7.71 billion from USD3.23 billion a year before, which HSBC said reflected the positive impact of a higher interest rate environment. However, the figure fell short of company-compiled analyst estimates of USD8.10 billion.
Diluted and basic earnings per share rose to USD0.29 from USD0.10.
"The increase was in part due to a USD2.3 billion impairment in 3Q22 relating to the planned sale of our retail banking operations in France, of which USD2.1 billion was reversed in 1Q23 as the completion of the transaction became less certain. We now expect to reclassify these operations to held for sale in 4Q23, at which point the impairment would be reinstated," the bank explained.
Net interest income rose 15% to USD9.25 billion from USD8.01 billion, as net fee income increased 5.3% to USD3.00 billion from USD2.85 billion. Net operating income climbed 45% to USD15.09 billion from USD10.44 billion, which was short of analyst estimates of USD16.24 billion.
Net interest margin rose to 1.70% from 1.51% a year prior, but slipped from 1.72% in the prior quarter.
At the end of the period, the bank's CET1 ratio rose to 14.9% from 14.2% the year prior, and 14.7% at the end of June. HSBC explained that the increase was due to capital generation, as well as lower risk-weighted assets.
For the period, it will pay out an interim dividend of USD0.10 per share. HSBC also announced its intention to begin a further share buyback of up to USD3.0 billion, which will begin "shortly" and complete at the time of its full-year results announcement on February 21.
In terms of outlook, HSBC said it remains "committed to targeting" a return on average tangible equity in the mid-teens for this year and next, excluding the impact of material acquisitions and disposals.
It maintained guidance of net interest income for 2023 of over USD35 billion, having achieved USD32.61 billion in 2022.
"We have had three consecutive quarters of strong financial performance and are on track to achieve our mid-teens return on tangible equity target for 2023. There was good broad-based growth across all businesses and geographies, supported by the interest rate environment. Our Wealth business also gained further traction, attracting USD34 billion of net new invested assets in the quarter and growing wealth balances by 12% compared with last year," said Chief Executive Officer Noel Quinn.
Shares in HSBC were up 0.4% at HKD58.30 each in Hong Kong before the midday break on Monday.
By Elizabeth Winter, Alliance News senior markets reporter
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