HSBC Swings to Profit as Pivot to Asia Pays Off -- Update

By Margot Patrick and Joanne Chiu Features Dow Jones Newswires

HSBC Holdings PLC swung to a third-quarter net profit, as revenue in Asia rose from increased customer borrowing and a growing deposit base.

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The U.K. banking giant on Monday reported a $3.24 billion net profit for the period compared with a net loss of $204 million in the same quarter last year, on revenue up 36% to $12.98 billion. On a pretax basis, the bank's profit surged to $4.62 billion from $843 million a year ago.

Chief Executive Stuart Gulliver said the bank's international network continued to deliver strong growth in the third quarter, and its pivot to Asia is driving higher returns and lending growth, particularly in Hong Kong. The bank this month named retail head John Flint as its next chief executive, signaling continuity in the Asia-focused bank's strategy.

Asia loans and advances grew 17% in the three months to Sept. 30, compared with the third quarter of 2016. Asia customer deposits were $10.1 billion higher than at June 30. Across the bank, revenue on retail deposits rose to $1.61 billion from $1.3 billion in the third quarter of 2016.

The third-quarter results come after HSBC in late July reported a 57% rise in net profit of $3.87 billion for the second quarter amid improving loan growth and rising contribution from its other businesses. The profit growth has helped the bank accrue surplus capital, and it has been returning some of it to shareholders by buying back shares.

In an interview, finance chief Iain Mackay said the bank still has around $10 billion of extra capital tied up in its subsidiaries, including around $6 billion in the U.S. He said further buybacks would be considered, "when the time is appropriate." Local regulators must approve capital moving up to the group level.

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The bank said it's on track to meet most of its strategy targets announced in 2015 that are due to be completed by the end of this year. The bank is expected to announce a refined strategy after Mr. Flint starts as CEO in February.

Write to Margot Patrick at margot.patrick@wsj.com and Joanne Chiu at joanne.chiu@wsj.com

(END) Dow Jones Newswires

October 30, 2017 04:50 ET (08:50 GMT)