HSBC Q3 profits up five-fold to $4.6 bn on booming Asia

This file photo taken on July 31, 2017 shows pedestrians walking past HSBC signage in the Admiralty district of Hong Kong. (AFP/Isaac Lawrence)
Updated 30 October 2017

HSBC Q3 profits up five-fold to $4.6 bn on booming Asia

HONG KONG: Profits at banking giant HSBC leapt five fold in the third quarter to $4.6 billion, the company said Monday, as business booms in Asia and a huge restructuring drive bears fruit.
The massive jump in pre-tax profits came weeks after a new chief executive was unveiled as part of a management overhaul that has seen the London-based behemoth roar back from costly write downs.
John Flint, head of retail banking and wealth management, will take up his position in February when current head Stuart Gulliver steps down, and has said he wants to “accelerate the pace of change.”
The Asia-focused firm has been on a recovery drive to streamline its business and slash costs since 2015, including laying off tens of thousands of staff.
That came as part of wide-ranging restructuring programs during a troubled period for the bank and sector as a whole following the global financial crisis in 2008.
Reported pre-tax profit jumped to $4.6 billion in the three months to the end of September, compared with $843 million over the same period in 2016.
Shares were up 0.7 percent at HK$77.65 ($9.95) in early afternoon trading.
Gulliver said the bank had “maintained good momentum in the third quarter,” with higher revenue across its main global businesses.
“Our pivot to Asia is driving higher returns and lending growth, particularly in Hong Kong,” he added.
Net profit also rose from a loss of $617 million in the third quarter of 2016 to $2.96 billion.
Profits in 2016 had been hit by the loss on sale of the bank’s operations in Brazil, the bank said in its statement.

Analysts said the result was better than expected.
“I think HSBC is one of the best international banking stocks at this moment,” Dickie Wong, executive director of research at Kingston Securities, told AFP.
“It is the third consecutive quarter that earnings and revenue have increased.”
The bank said it was on track to achieve annual cost savings of $6 billion by the end of the year.
After some strong profitable years under Gulliver, HSBC earnings plunged in 2016 on huge write downs and restructuring charges. Profits rebounded in the first half of this year.
The bank had in 2015 set out a plan to axe 50,000 jobs and exit non-core markets, as it also navigated a series of damaging probes into HSBC operations.
Wong pointed out that it may still feel the effects of legal challenges and expenses.
“HSBC has had to spend a lot of money to hire more lawyers to help them to fix their legal problems and to enhance their compliance department,” Wong said.
“This is something that may pull them back.”
The bank was fined $1.92 billion by US prosecutors in 2012 to settle allegations that it failed to enforce anti-money laundering rules exposing it to exploitation by drug cartels and terrorist organizations.
In 2015, HSBC was forced to apologize for “unacceptable” failings at its Swiss division following allegations that the unit helped rich clients hide billions from the taxman.
Also during Gulliver’s seven years at the helm, HSBC was fined along with other global banks by US and British regulators for attempting to rig foreign exchange markets.
Last week a British court ruled that former currency trading executive Stuart Scott should be extradited to the United States to face fraud charges, days after a US jury found his alleged co-conspirator guilty.

Germany: US calling European cars a threat is ‘frightening’

Updated 27 sec ago

Germany: US calling European cars a threat is ‘frightening’

  • ‘If these cars ... suddenly spell a threat to US national security, then that is frightening to us’

MUNICH, Germany: German Chancellor Angela Merkel on Saturday labelled as “frightening” tough US trade rhetoric planning to declare European car imports a national security threat.

“If these cars... suddenly spell a threat to US national security, then that is frightening to us,” she said.

Merkel pointed out that the biggest car plant of German luxury brand BMW was not in Bavaria but in South Carolina, from where it exports vehicles to China.

“All I can say is it would be good if we could resume proper talks with one another,” she said at the Munich Security Conference.

“Then we will find a solution.”

A US Commerce Department report has concluded that auto imports threaten national security, setting the stage for possible tariffs by the White House, two people familiar with the matter said Thursday.

The investigation, ordered by President Donald Trump in May, is “positive” with respect to the central question of whether the imports “impair” US national security, said a European auto industry source.

“It’s going to say that auto imports are a threat to national security,” said an official with another auto company.

The report, which is expected to be delivered to the White House by a Sunday deadline, has been seen as a major risk for foreign automakers.

Trump has threatened to slap 25 percent duties on European autos, especially targeting Germany, which he says has harmed the American car industry.

After receiving the report, the US president will have 90 days to decide whether to move ahead with tariffs.

Trump in July reached a trade truce with European Commission President Jean-Claude Juncker, with the two pledging no new tariffs while the negotiations continued.

Brussels has already drawn up a list of €20 billion ($22.6 billion) in US exports for retaliatory tariffs should Washington press ahead, the commission’s Director-General for Trade Jean-Luc Demarty told the European Parliament last month.

The White House has used the national security argument — saying that undermining the American manufacturing base impairs military readiness, among other claims — to impose steep tariffs on steel and aluminum imports, drawing instant retaliation from the EU, Canada, Mexico and China.

Trading partners have sometimes reacted with outrage at the suggestion their exports posed a threat to US national security.