London, UK (BBN)-Lower costs from regulatory fines have contributed to higher profits for HSBC.
Pre-tax profit at Europe’s biggest lender jumped 32 per cent from a year ago in the third quarter, beating analysts’ expectations, reports BBC.
Its profit was $6.1bn (£3.9bn), up from $4.6bn in the same period a year earlier and above forecasts of $5.2bn.
The bank announced thousands of job cuts in June, along with asset sales, as part of cost-cutting measures to improve returns to shareholders.
“The fines going away, lower costs – that’s the banking story of the moment,” Peter Hahn from Cass Business School told BBC News.
HSBC has been speeding up the sale of loss-making businesses and sold its operations in Brazil in August.
“Our cost-reduction measures are beginning to have an impact on our cost base,” chief executive Stuart Gulliver said in the bank’s eresults release on Monday.
“There is more to achieve on costs and we expect the measures we have already taken to have a further impact in the fourth quarter.”
HSBC is also expected to decide on whether to move its headquarters out of the UK by the end of this year at the earliest. Hong Kong is seen as a likely alternative.
“If you want to be a global, corporate bank, you’ve got to be headquartered in the US or China because you’re not going to be as big to their economies as you are to the UK,” Hahn said.
Revenue down
Despite the jump in profit, the bank’s revenue was down 4 per cent to $14bn on the stock market correction in Asia, which affected its retail banking and wealth management business.
However, Gulliver said its third-quarter performance was “resilient” against tough market conditions.
“Despite slowing growth in the mainland Chinese economy and market volatility in Asia, there has been no visible impact on our Asian credit quality,” he added.
The banking giant has been hit by a series of regulatory hurdles and fines in European and US markets and has said it is shifting its focus to growing its business in Asia.
HSBC’s Hong Kong-listed shares closed down 1.3 per cent and fell 1.7 per cent to 499p in morning trading in London. The stock has fallen by more than a fifth in the past 12 months in London.