HSBC (LON:HSBA) have seen their share price fall despite revenue rising and a huge increase in profit before tax.
Britain’s largest bank announced that for the first nine months of the year their pre-tax profit had increased by 41% to $14.9 billion, and was up 448% from the third quarter in 2016.
Last year the company was hit by $1.7 billion of losses due to their sale of Brazilian operations in July, which accounts for nearly half of the fivefold increase in profits compared to same quarter last year.
HSBC’s revenue climbed marginally for the first nine months of the year by $0.2 billion to $39.1 billion. The bank’s adjusted revenue for the quarter managed to beat analyst expectations as they rose 2.5% to $13 billion. The concensus analyst estimate was $12.7 billion.
Stuart Gulliver, the Group Chief Executive, said “We maintained good momentum in the third quarter, with higher revenue in our three main global businesses. We also continued to make good progress with the strategic actions we set out in 2015. Our international network continued to deliver strong growth in the third quarter, and our pivot to Asia is driving higher returns and lending growth, particularly in Hong Kong”.
Further to this it was noted that “growth in loans and advances translated into higher adjusted revenue in all three main global businesses compared with 3Q16, and our strong year-to-date revenue performance enabled us to accelerate investment in business growth.”
These results come two weeks after HSBC announced the successor to Stuart Gulliver as chief executive. It was announced that John Flint, currently head of retail banking and wealth management for the company, would take over in February next year.
Operating costs for firm also rose compared to last year. Adjusted operating costs is up 7.4% to $7.8 billion compared to last year. HSBC attribute this to their acceleration of investment to grow the business, aiming to reinforce the impact of targeted investment in previous quarters.
Part of the increase in these operating costs was due to Brexit. Costs associated with the UK’s exit from the EU was $12 million for 9 months, $8m for the third quarter. HSBC had also previously asserted that the was a strong possibility they would move 1,000 employees to Paris from London due to Brexit, costing between $200-300 million. They have since reduced the estimated number of
people that will be relocated.
HSBC share price fell by 1.6% to 736p at the time of writing.