HSBC Q3 Pre-Tax Earnings Rise Y/Y as ECL Charges Decline, Stock Up

HSBC Holdings HSBC reported a third-quarter 2024 pre-tax profit of $8.5 billion, up 9.9% from the prior-year quarter. The reported quarter included a loss on the early redemption of legacy securities and disposal losses tied to treasury repositioning and risk management. This was partly offset by a gain on foreign exchange hedges relating to the disposal of banking business in Canada.Stay up-to-date with all quarterly releases: See Zacks Earnings Calendar.Results were aided by a decline in expected credit losses and other credit impairment charges (ECL) and higher revenues. Given these positives, the company's shares gained 4.3% in pre-market trading hours today. However, higher expenses were an undermining factor.HSBC’s Revenues Increase, Expenses RiseTotal revenues were $17 billion, up 5.2% year over year. The rise primarily resulted from an increase in other operating income.Operating expenses increased 2.2% year over year to $8.1 billion due to higher technology costs and inflationary impacts. This was partly offset by continued cost discipline and the impact of disposals in Canada and France.In the quarter under review, ECL was $986 million, down 7.9% year over year.The common equity tier 1 (CET1) ratio as of Sept. 30, 2024, was 15.2%, up from 14.9% as of Sept. 30, 2023. The leverage ratio was 5.7%, stable compared with the prior-year quarter.HSBC’s Quarterly Performance by Business LinesWealth and Personal Banking: The segment reported $3.23 billion in pre-tax profit, up 16.2% from the year-ago period. The rise was driven by an increase in net fee income and other operating income.Commercial Banking: The segment reported a pre-tax profit of $3 billion, up 5.4% from the year-ago quarter. Lower ECL charges and higher other operating income led to the increase.Global Banking and Markets: Pre-tax profit was $1.79 billion, which increased 39.7% year over year.Corporate Centre: The segment reported a pre-tax profit of $400 million, down 47.7% from the year-ago quarter.HSBC’s Capital Deployment UpdateHSBC’s board of directors approved a third interim dividend of 10 cents per share.The company intends to initiate a share buyback of up to $3 billion, which will likely be completed within a four-month period prior to the company’s 2024-full year results announcement.Outlook for HSBCFor 2024, management expects banking net interest income (NII) of $43 billion.HSBC targets year-over-year operating expense growth of 5% for 2024.For 2024, ECL charges, as a percentage of average gross loans, are expected between 30 and 40 basis points.HSBC expects a return on average tangible equity in the mid-teens for 2024 and 2025, which excludes the impacts of notable items.The company intends to manage the CET1 ratio within its medium-term target of 14-14.5%.HSBC expects a dividend payout ratio of 50% for 2024.Our View on HSBCHSBC’s strong capital position, initiatives to strengthen digital capabilities, extensive network and efforts to improve operating efficiency through business restructuring plans are expected to support its financials. Although the company’s initiatives to improve market share in Asia will support financials, these will lead to a rise in expenses. Subdued revenues given the challenging macroeconomic environment is another headwind.HSBC Holdings plc Price, Consensus and EPS Surprise HSBC Holdings plc price-consensus-eps-surprise-chart | HSBC Holdings plc QuoteCurrently, HSBC carries a Zacks Rank #3 (Hold). You can see the complete list of today's Zacks #1 Rank (Strong Buy) stocks here.Performances of Other Foreign BanksICICI Bank Ltd.’s IBN net income for the second quarter of fiscal 2025 (ended Sept. 30, 2024) was INR 117.5 billion ($1.4 billion), up 14.5% from the prior-year quarter.IBN’s results were driven by a rise in NII, non-interest income, and growth in loans and deposits. However, higher operating expenses and provisions were the undermining factors.Deutsche Bank DB reported third-quarter 2024 earnings attributable to its shareholders of €1.5 billion ($1.6 billion), up 41.7% year over year.Results were driven by solid growth in Investment Bank revenues and the partial release of Postbank-related litigation provisions. However, DB has increased its provision of credit loss forecast for 2024.Research Chief Names "Single Best Pick to Double"From thousands of stocks, 5 Zacks experts each have chosen their favorite to skyrocket +100% or more in months to come. From those 5, Director of Research Sheraz Mian hand-picks one to have the most explosive upside of all.This company targets millennial and Gen Z audiences, generating nearly $1 billion in revenue last quarter alone. A recent pullback makes now an ideal time to jump aboard. Of course, all our elite picks aren’t winners but this one could far surpass earlier Zacks’ Stocks Set to Double like Nano-X Imaging which shot up +129.6% in little more than 9 months.Free: See Our Top Stock And 4 Runners UpWant the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report Deutsche Bank Aktiengesellschaft (DB): Free Stock Analysis Report ICICI Bank Limited (IBN): Free Stock Analysis Report HSBC Holdings plc (HSBC): Free Stock Analysis ReportTo read this article on Zacks.com click here.Zacks Investment ResearchWeiter zum vollständigen Artikel bei Zacks Weiter zum vollständigen Artikel bei Zacks