HSBC profit leaps as drop in fines counters Asia slowdown

HSBC profit jumped by a third in the latest quarter as a drop in fines for past misconduct more than offset the impact of a slowdown in Asia and increased spending on regulatory compliance.

Europe’s biggest bank also said on Monday that it will step up its push into investment banking activity on the Chinese mainland by establishing a majority-owned securities venture in the country.

The bank posted third-quarter profit of $6.1 billion (€5.5 billion), up from $4.6 billion (€4.1 billion) and above the average analyst forecast of $5.2 billion (€4.7 billion). Adjusted profit fell 14 per cent to $5.5 billion, taking into account the lower fines and other one-off items.

HSBC’s London shares were down 0.8 per cent at 503.5 pence by Monday’s European close, underperforming a slightly higher European bank index . The shares are down 18 per cent this year -- hurt by concerns about slowing Asian growth -- compared with a 2 per cent rise for the European banking sector.

Costs related to fines and compensation for customers fell by $1.4 billion in the three months to September 30th from a year ago, marking the bank’s progress on conduct issues that have marred recent quarterly results.

Yet the London-based bank spent $2.2 billion on regulation and compliance in the first nine months of 2015, up 33 per cent year on year, even as the British government looks to take a more accommodative stance towards the industry.

HSBC’s underlying revenue fell 4 per cent year on year to $15.1 billion compared, with plunging stock markets and slowing economic growth hitting its business in Asia, including its Hong Kong powerhouse.

“HSBC management have done a very good job of trying to correct its internal problems, but these results show no bank can improve revenues if the global economy is against it,” said Jim Antos, analyst at Mizuho Securities Asia in Hong Kong.

– (Reuters)