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HSBC Q3 earnings “significantly” higher
by Ishita Sood - November 10, 2009 - comments
HSBC shares climbed 3.1 percent Tuesday, outperforming most other European banks
London, November 10 -- HSBC Holdings, Europe’s biggest bank, said in a statement Tuesday that its underlying third quarter pretax profit was “significantly” higher than the year-earlier period.
The results were better on account of the charges linked to the changing value of its own debt.
The London based bank said, “In the U.S., loan impairment charges in the consumer finance business in the third quarter were encouragingly lower than the run-rate in the first half of the year.”
Low impairment charges
The bank said the loan impairment reduced in the third quarter and was at its lowest level since the second quarter of 2008.
In the U.S., where HSBC closed its consumer finance unit, they declined for the first time since 2006.
Except for the Middle East, everywhere else in the world, the impairment charges were low.
In the investment banking unit, revenue and profit declined but were still "well ahead" of the third quarter of 2008, helped by strong credit trading revenue.
HSBC has a strong capital ratio, partly due to this year's rights issue.
Chief Executive Officer Michael Geoghegan, who is relocating to Hong Kong in February, says the bank has reduced lending from the U.S. and is focusing on emerging markets like China, India and Brazil.
“In Hong Kong, we increased commercial lending and maintained our leading position in mortgage lending," Geoghegan said.
“I believe that the biggest jolt has now passed through the global economy,” he said. “It is too early to claim victory, especially while unemployment is still rising in the West. The world will likely experience a two-speed recovery and emerging markets currently offer the brightest prospects for growth.”
HSBC—going strong without bailout moneys
HSBC shares climbed 3.1 percent after the announcement, outperforming most other European banks. Overall the stock gained 23 percent this year.
"At a time when economic conditions have remained challenging and public trust in banks has been seriously compromised, we are attracting new customers in our target segments. We have maintained our strong deposit base and we continue to lend to and support customers through difficult times," said Geoghegan.
All banks are under pressure to build up capital reserves to avoid a repeat of the financial crisis.
HSBC is the favorite choice of many because it never turned to the government for any bailout money.