LONDON (Alliance News) - Asia-focused bank HSBC Holdings PLC said Monday it was making progress on its new growth strategy as third quarter profit and revenue both expanded amid growth in all its global businesses.
For the three months ended September, pretax profit rose 28% to USD5.92 billion from USD4.62 billion the year prior. Excluding the impact of currency translation, pretax profit rose 16% on the year before.
This was after revenue added 1.6% to USD13.80 billion from USD13.58 billion the year before. Revenue performance was driven by "strong" growth in all of the Asia-focused bank's three main global businesses.
"Retail Banking & Wealth Management and Commercial Banking built on the momentum generated in the first half of the year, with both using the benefits of past investment to grow lending and deposit balances," HSBC Chief Executive Officer John Flint said.
"Adjusted revenue growth in Retail Banking & Wealth Management came primarily from current accounts, savings and deposits, particularly in Hong Kong," Flint added. "In Commercial Banking, all of our transaction banking businesses generated higher adjusted revenue, including a sixth consecutive quarter of double-digit year-on-year adjusted revenue growth in Global Liquidity & Cash Management. Global Banking & Markets had a very good quarter on the back of our strength in transaction banking and foreign exchange."
"The strong revenue environment continues to enable us to invest in growth and in the simplification of the organisation," Flint explained.
HSBC proposed a 10 US cent per share third quarter dividend. This was flat on the year prior.
The common equity tier one ratio for HSBC ended the period at 14.3%, compared to 14.5% nine month earlier. Loans advanced to customers rose 1.1% to USD981.46 billion from USD962.96 billion nine months earlier.
"These are encouraging results that demonstrate the revenue potential of HSBC," Flint added. "We are doing what we said we would – delivering growth from areas of strength, and investing in the business while keeping a strong grip on costs. We remain committed to growing profits, generating value for shareholders and improving the service we offer our customers around the world."
In June, newly-appointed Flint described a strategy in which the banking group would return to "growth mode" following its period of restructuring.
By 2020, HSBC is targeting a return on tangible equity of more than 11% under this new strategy. It also plans to invest between USD15 billion and USD17 billion dependant on "achieving positive adjusted jaws each financial year".
The jaws ratio - a key financial performance indicator - is the difference between the percentage growth in income and the percentage growth in expenses.
For the third quarter, return on tangible equity stood at 10.9%, up from 8.2% the year prior. For the nine months ended September, the jaws ratio was at negative 1.6%.
HSBC also plans to "sustain" dividends at current levels and engage in share buybacks where "appropriate" as well as intending to retain CET1 solvency ratio above 14%.
In order to achieve this, HSBC is targeting mid-single digit revenue growth combined with a low to mid-single digit growth in operating expenses.
HSBC Holdings (HSBA)