HSBC's Flint Receives 'Positive' Goal After Third Quarter

HONG KONG / LONDON (Reuters) – HSBC Holdings Plc reported a higher-than-expected 28% rise in earnings in the third quarter, driven by a new push to limit costs and market share gains in its largest region Asian, which paid off in Hong Kong shares significantly higher Monday.

Europe's largest asset bank in assets has benefited in recent years from a broader restructuring after the global financial crisis, but rising costs are a cause for concern as CEO John Flint entered office in February, intensifies its investments.

High costs persistently weighed in previous quarters weighed on HSBC's earnings. Analysts said its share price growth would be capped until the company could post above-cost revenues, according to a trend known as "city".

"We are absolutely in tune with our plans, so we expect our jaws to be positive all year long," Flint told Reuters during a phone interview. "The real thing is that we are in control of the cost base and we are getting some revenue momentum."

In September, pre-tax income reported by the bank was $ 5.9 billion, up from $ 4.6 billion for the same period last year. Earnings were above the average of the bank's estimated analyst estimates of $ 5.6 billion, and the percentage growth was the strongest of the four quarters.

HSBC said its third-quarter spending was down 2.4% from the previous three months, reversing the trend of the past two quarters. Quarterly reported revenues increased 6.3% over the same period last year to reach $ 13.8 billion.

Flint has planned to spend up to $ 17 billion in three years for technology and China.

HSBC also hires more people to boost the growth of some of its units, including investment banks and private banks, sectors in which it lags behind its American and European rivals.

This month, he hired former JPMorgan banker, Greg Guyett, as co-director of global banking, which includes investment banking, to fill the void left by the departure of the former Goldman Sachs banker, Matthew Westerman.

He has also appointed Peter Enns, Goldman Sachs' senior banker, to lead his investment bank's global group of financial institutions, after losing a number of leading traders this year.

The number of full-time bank employees at the end of September increased from 5,044 to 233,731, according to the report.

HSBC shares in Hong Kong extended their morning earnings up to 5.6% in the afternoon after the results, while the overall market was up 0.3%. The stock was trading up 4.9% at 07:25 GMT.

ASIA BUSINESS

Flint said he has not yet seen any signs of distress in the financial health of companies and individuals, as Britain approaches the critical period in its exit talks with the European Union, amid concerns growing up with a Brexit without compromise.

"We hope that progress can be made in the coming weeks," he said.

The CEO also downplayed the short-term impact of escalating Sino-US trade tensions on business activity. "It's a real problem to be clear, but it's still not showing up significantly in business," he said.

Reported pre-tax earnings from HSBC's operations in Asia, which accounted for 75% of the bank's total profit in September, increased 10.7% in the third quarter to $ 4.5 billion.

HSBC's regional hub is centered around China's Pearl River Delta region with billions of investments and plans to strengthen its wealth management and retail business in the world's second-largest economy.

The southern Pearl River delta, home to 11 industrial cities that will merge into a megacity, already has a larger economy than Indonesia and has moved from a manufacturing base to a technology center.

HSBC is expected to be the first company to issue CDRs (Chinese Depositary Receipts) through a link between the London and Shanghai Stock Exchanges, which will begin by the end of the year, announced people closer to the topic this month.

Flint said the bank was considering the CDR option, but declined to comment further.