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HSBC Holdings PLC on Tuesday reported a decline in profit and revenue in the third quarter, while also appointing a new chief financial officer.
Shares in the Asia-focused lender were down 5.1% at 451.00 pence in London on Tuesday morning. The stock closed down by the same percentage in Hong Kong.
In the three months to September 30, HSBC reported pretax profit of $3.15 billion, down 42% from $5.40 billion a year before.
"We maintained our strong momentum in the third quarter and delivered a good set of results. Our strategy produced good organic growth in all three global businesses, and net interest income increased on the back of rising interest rates. We retained a tight grip on costs, despite inflationary pressures, and remain on track to achieve our cost targets for 2022 and 2023," Chief Executive Noel Quinn said.
Net interest income improved to $8.58 billion from $6.61 billion, but net fee income fell to $2.78 billion from $3.32 billion. Net insurance premium income slipped to $2.66 billion from $2.72 billion. As a result, revenue decreased by 3.2% to $11.62 billion from $12.01 billion.
HSBC explained that its third quarter results included a $2.4 billion impairment, following the reclassification of its retail banking operations in France to held-for-sale, as well as a net charge for expected credit losses and other credit impairment charges, compared with a net release in third quarter of 2021.
However, net interest margin improved to 1.57% from 1.19% year-on-year
Its cost efficiency ratio was 68.7% in the third quarter, compared to 66.5% a year earlier.
HSBC's CET1 ratio ended September 30 CET1 at 13.4%, down from 15.9% a year ago.
Turning to the bank's business units, HSBC's Wealth & Personal Banking adjusted pretax profit rose to $2.41 billion from $1.90 billion, while Commercial Banking profit increased to $2.06 billion from $1.97 billion and Global Banking & Markets adjusted profit rose to $1.53 billion from $1.42 billion.
Regionally, HSBC's Asia operation continue to be its profit driver.
Statutory pretax profit in Asia rose to $3.51 billion from $3.30 billion a year earlier, whilst in Europe profit swung to a loss of $1.57 billion from $1.14 billion profit. Profit in the Middle East & North Africa improved to $493 million from $378 million. Profit in North America rose to $460 million from $358 million. In Latin America, profit increase to $248 million from $222 million.
In the first nine months of 2021, HSBC's group pretax profit fell to $12.32 billion from $16.24 billion, while revenue slipped to $36.85 billion from $37.56 billion.
Looking ahead, HSBC said: "Our outlook on revenue remains positive and we have upgraded our net interest income guidance for 2022 to $32 billion, based on the current market consensus for global central bank rates.
"In 2023, we now expect net interest income of at least $36 billion, with the reduction from the at least $37 billion guidance provided at our interim results reflecting the impact of sterling depreciation against the US dollar and a higher cost of funding in our trading book. We continue to monitor the expected path of interest rates. This is expected to be supported by low-single-digit percentage lending growth."
HSBC said it has appointed Georges Elhedery as its new chief financial officer, effective from January 1.
Previously, Elhedery was co-CEO of HSBC's Global Banking & Markets, before taking a six-month sabbatical.
Elhedery will succeed Ewen Stevenson, who will step down as CFO on December 31 before leaving the company in April 2023. Stevenson has been with HSBC since 2018.
"HSBC has made significant changes over the last three years. It is now more efficient and more competitive. The leadership has repositioned the business by exiting underperforming and non-strategic portfolios, maintaining a tight grip on costs, and investing in areas of growth," it said.
The company added that this is part of long-term succession planning, as it approaches the end of its three-year transformation programme.
HSBC also named Greg Guyett as its new CEO of Global Banking & Markets, effective immediately. Guyett has been with HSBC since 2018, and led its Global Banking & Markets unit during Georges' recent sabbatical.
CEO Quinn added: "Georges is an exceptional leader with strong experience of leading a global business and a major geographic region. He has a track record of driving growth and managing change, and brings a strong focus on execution. He also has the necessary technical and strategic capabilities to take on the role of group CFO and to continue the delivery of the board's strategy."
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