HSBC quarterly profit rises 32% to $9.6bn ahead of UK budget

HSBC’s $2.7bn payout includes a further $1bn share buyback

HSBC, the London-headquartered bank, reported on the morning of October 27 that quarterly profit rose 32% to $9.6bn for the July-to-September period, slightly below consensus estimates. The announcement came as John Healey put the finishing touches on his budget, due the following day.

HSBC said higher interest rates, lower loan losses and smaller legal provisions compared with a year earlier helped lift earnings.

Net interest income — the difference between what banks charge for loans and what they pay for savers’ deposits — rose to $9.3bn from $8.8bn year on year.

The increase was apparently lifted by HSBC’s hedging strategy and growth in deposits in Hong Kong, while UK deposits stayed flat.

HSBC said it could hand $2.7bn to shareholders, including another $1bn share buyback and an interim dividend of $0.1 per share. The Guardian valued the distribution at £2bn, while HSBC said the interim dividend would mean distributing another $1.71bn to investors.

The Guardian reported fresh calls for higher taxes on banks as the budget neared. The outlet’s Kalyeena Makortoff reported that HSBC’s performance would further reassure the Treasury that the UK’s top banks could shoulder a tax increase.

The tax question remained prospective, with HSBC’s earnings supplying a fresh argument in the budget debate rather than confirmation of a policy change.

HSBC’s result followed Barclays, which reported a 12% jump in profits last week. The two sequential increases gave the renewed calls for bank taxes a broader banking-sector context.

The day’s agenda called for a morning auction of a 2032 UK Treasury gilt. It listed the US house price index at 1pm GMT, followed by the US consumer confidence report and US new homes sales data at 2pm.