HSBC expects boost from early rate rise as profit soars

Banking giant HSBC has reported a surprise 74 per cent rise in third quarter profit as it shrugged off concerns about pandemic bad loans and property problems in China, allowing it to announce a share buyback of £1.5bn.

HSBC said it expects to benefit from interest rates rising earlier than expected

HSBC said it expects to benefit from interest rates rising earlier than expected. The bank said that its revenue expectations are beginning to look more positive, saying it is lending more and expects policy rates to rise.

In the three months to the end of September, revenue rose to £3.9bn, boosted by the decision to release £507m that it had put away to cover bad debt during the Covid-19 pandemic.

Sign up to our Business newsletter

Sign up to our Business newsletter

HSBC's chief executive, Noel Quinn, 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.”

The bank said that the £1.5bn share buyback was made possible by its strong capital position.

The payout comes two months after HSBC announced an interim dividend of 5p per share.

Richard Hunter, head of markets at interactive investor, said: “HSBC has flexed its financial muscles as it continues to emerge from the horror show of 2020.

“The numbers are flattered by further bad debt releases, in what will be the likely theme of the season, but the announcement of a share buyback programme is a positive endorsement of the bank’s own confidence in prospects.

"Pre-tax profit has seen a sharp increase from $3.1bn to $5.4bn, ahead of expectations, with all regions currently profitable and with mortgage balances showing an uplift given continuing consumer interest in the housing market."