A sharp drop in pre-tax profit masked a stronger-than-expected quarter for HSBC, sending shares upwards on Monday morning.
Pre-tax profit fell to $843 million, down from $6.1 billion a year ago. However, adjusted profit rose 7 percent to $5.6 billion, coming in above analysts’ expectations.
Chief executive Stuart Gulliver said:
“Our third-quarter performance reflected the strength of our network and the deepening impact of our strategic actions.
“Reported profits were down, but adjusted profits were higher than last year’s third quarter in all four global businesses and four out of five regions.”
However, Gulliver told Reuters that “UK retail banking profit will be challenging” over the next year.
Adjusted revenue rose 2 percent in the third quarter after a 4 percent fall in costs, showing cost saving schemes may be beginning to have an effect.
The major fall in profit was largely the result of one-off costs, including the fall in value of the bank’s own debt, a loss on the sale of its Brazil operations and some customer compensation payments in America.
HSBC (LON:HSBA) shares rose 5 percent on the London market on Monday, currently trading up 4.84 percent at 623.70 (1019GMT).
Mixed earning season for UK banks
HSBC was the last major bank to report this quarter, with Lloyds, RBS and Barclays posted better-than-expected profits last week.
Shares in Lloyds bank fell last week after Chancellor Philip Hammond sold more of the taxpayer’s stake in the banking group, taking it to below 9 percent.
RBS also reported disappointing figures for the first nine months of 2016, incurring a £2.5 billion loss, £469 million of which was in the third quarter. It had made a profit in the same three months last year.