HSBC results hit by Asia market falls
In this article (6)
HSBC has reported a 14% drop in profits for the third quarter of 2015 after adjusting for foreign currency movements, as the sharp falls in stock markets across Asia hit revenues in its retail banking and wealth management division. The overall adjusted profit was $5,5bn (£3.56bn, €5.0bn) compared with $6.4bn in the third quarter of 2014.
The global bank said adjusted revenues were down 4% in the three months to the end of September to $14bn, mainly because of the drop in the Principal Retail Banking & Wealth Management division. Revenue was also lower in Global Banking & Markets operation.
Operating expenses were also up 2% in the third quarter at $8.58bn, mainly due to increased spending on regulatory programmes and compliance.
“Despite slowing growth in the mainland Chinese economy and market volatility in Asia, there has been no visible impact on our Asian credit quality in 3Q15,” group chief executive Stuart Gulliver told an investor briefing.
Hong Kong hit
Iain Mackay, HSBC’s group finance director, said the reduction in revenue in the wealth management operation mainly reflected lower earnings in Hong Kong.
“This was caused by the stock market correction in Asia, which reduced asset valuations in our life insurance manufacturing business,” Mackay said.
Profit from retail banking and wealth management operations also fell 32.8% in the third quarter when compared to the previous quarter. While for the Asia region as a whole profits were down 30% in Q3 compared to Q2.
The bank also reported a 19.1% drop in profits from the Middle East and Africa region during the latest quarter compared with the previous one.
Overall HSBC ‘s results were better than expected after costs related to fines and compensation for customers fell by $1.4bn. However, its shares weakened by 1.2% in London morning trade.
Questions & Answers
Q.What was the main reason for the drop in HSBC's adjusted revenues during the third quarter of 2015?
What was the main reason for the drop in HSBC's adjusted revenues during the third quarter of 2015?
Adjusted revenues fell primarily due to a decline in the Principal Retail Banking & Wealth Management division. Revenue was also lower in the Global Banking & Markets operation, contributing to the overall decrease.
Q.How did spending on operating expenses change for HSBC in the third quarter?
How did spending on operating expenses change for HSBC in the third quarter?
Operating expenses rose by 2% in the third quarter, reaching $8.58bn. This increase was mainly attributed to higher spending on regulatory programmes and compliance requirements across the bank's operations.
Q.What specifically caused the reduction in revenue within HSBC's wealth management operation in Hong Kong?
What specifically caused the reduction in revenue within HSBC's wealth management operation in Hong Kong?
The reduction in revenue in Hong Kong's wealth management operation mainly reflected lower earnings. This was caused by the stock market correction in Asia, which reduced asset valuations in the bank's life insurance manufacturing business.
Q.Despite market volatility, what was the status of HSBC's Asian credit quality in the third quarter?
Despite market volatility, what was the status of HSBC's Asian credit quality in the third quarter?
Despite slowing growth in mainland China and market volatility across Asia, the group chief executive noted there had been no visible impact on HSBC's Asian credit quality during the third quarter of 2015.
Reader pulse
HSBC's Q3 results: what does it signal for retail?
16,391 votes so far