By
Mayowa Adebajo
March 27th, 2024
As HSBC has reported, its third-quarter profit before tax is down 36% year-on-year, at $3.1 billion. The after-tax figure is $2 billion (46% down), adjusted profit before tax is down 21% to $4.3 billion.
The largest European banking and financial services organization HSBC Holdings plc (NYSE: HSBC) has reported its third-quarter profit. The company has slightly outperformed analysts’ expectations but compared with the previous year, it has decreased indices. However, for HSBC CEO Noel Quinn, the results seem to be “promising” in light of the coronavirus pandemic.
Noel Quinn said:
“These were promising results against a backdrop of the continuing impacts of Covid-19 on the global economy. I’m pleased with the significantly lower credit losses in the quarter, and we are moving at pace to adapt our business model to a protracted low interest rate environment. We are accelerating the transformation of the Group, moving our focus from interest-rate sensitive business lines towards fee-generating businesses, and further reducing our operating costs.”
HSBC also suggests that in the next quarter, they will see a further decline in profits. As the company has explained, this will result from geopolitical risk, particularly relating to trade and other tensions between the US and China, uncertainty regarding the UK’s withdrawal from the European Union, as well as the spread of the second COVID-19 wave.
HSBC Third-Quarter Results
As HSBC has reported, its third-quarter profit before tax is down 36% year-on-year, $3.1 billion. The after-tax figure is 46% down, $2 billion, adjusted profit before tax is down 21% to $4.3 billion. Further, the bank reported $11.9 billion in revenue (11% down compared with Q3 2019). The drop reflects the impact of interest rate reductions on HSBC deposit franchises across all global businesses. HSBC’s reported expected credit losses and other credit impairment charges (ECL) are also $0.1 billion lower, to $0.8 billion. Reported operating expenses are down 1%, adjusted operating expenses are down 3% despite the continued investment. Above all, HSBC reported resilient operations not only in Europe but also in Asia.
The bank has significantly suffered because of the COVID-19 pandemic. For the first half of 2020, HSBC reported a whopping 65% drop in its pre-tax profits. Back then, its revenue tanked as credit losses were worse than expected. Currently, HSBC is facing the same challenges. However, they do not disturb the bank from plans to accelerate the transformation of its U.S. business, where it has long struggled to compete with serious local players.
As for HSBC stock performance, it is not the best one. Yesterday, HSBC shares closed 0.72% down, at $20.73. After hours, they declined by another 0.72%. HSBC market cap is $85.38 billion. Year-to-date, its stock is 46.97% down.