25 Oct 2021
Financial performance (vs. 3Q20)
- Reported profit after tax up $2.2bn to $4.2bn and reported profit before tax up $2.3bn to $5.4bn. The increase was driven by a release of expected credit losses and other credit impairment charges (‘ECL’) and a higher share of profit from our associates.
- All regions profitable in 3Q21, demonstrating continued earnings diversity. Asia contributed $3.3bn to Group reported profit before tax, while in HSBC UK reported profit before tax increased by $1.0bn to $1.5bn.
- Reported revenue up 1% to $12.0bn, including a favourable foreign currency translation movement. Adjusted revenue down 1% to $12.2bn, primarily reflecting unfavourable market impacts in life insurance manufacturing in Wealth and Personal Banking (‘WPB’) and lower revenue in Markets and Securities Services (‘MSS’). Notwithstanding these factors, we have seen continued good performances in areas of strategic focus, including wealth and trade finance products.
- Net interest margin (‘NIM’) of 1.19% was broadly stable compared with 3Q20 and 2Q21.
- Reported ECL were a net release of $0.7bn, compared with a $0.8bn ECL charge in 3Q20, reflecting continued stability in economic conditions and better than expected levels of credit performance.
- Reported and adjusted operating expenses were broadly unchanged as increases, including growth in technology investment, were offset by the impact of our cost-saving initiatives.
- Reported customer lending balances down $20bn in the quarter, including adverse foreign currency translation movements. On a constant currency basis, customer lending balances down $6bn, mainly from the repayment of $14bn of short-term borrowing to fund investments in initial public offerings in Hong Kong, partly offset by continued growth in mortgage balances of $7bn.
- Common equity tier 1 (‘CET1’) capital ratio of 15.9%, up 30 basis points (‘bps’) from 2Q21, reflecting a reduction in risk-weighted assets (‘RWAs’), partly offset by a decrease in CET1 capital, net of foreseeable dividends.
Noel Quinn, Group Chief Executive, said: “We had a good third-quarter performance, with strong growth in profits supported by additional credit provision releases. Our strategy remains on track, with good delivery in all areas. This was reflected in more consistent top-line growth, robust lending pipelines across our businesses, and rising trade and mortgage balances. While we retain a cautious outlook on the external risk environment, we believe that the lows of recent quarters are behind us. This confidence, together with our strong capital position, enables us to announce a share buyback of up to $2bn, which we expect to commence shortly.”
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