HSBC Profit Jumps 32% but Shares Drop on a Revenue Miss

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HSBC, Europe's largest bank, announced a share buyback of up to $1 billion on Tuesday and reported third-quarter pretax profit of $9.6 billion, up 32% from a year earlier. The figure was close to the $9.69 billion analysts expected. Revenue was $18.6 billion, up from $17.8 billion a year before but short of the $18.93 billion consensus.

Investors focused on the revenue shortfall. HSBC's London-listed shares fell 6.5% in early European trading, heading for their worst session since April 2025, and shares in Hong Kong dropped 2.95% after the release. Citi analysts called it a "mixed set of results," pointing to a 2% miss on revenue. They also noted an 18.8% return on tangible equity so far this year, well above the bank's medium-term guidance of about 17%.

Net interest income from banking rose 6%, and the bank booked higher fee income from its corporate and institutional banking and wealth businesses. The quarter's net interest income was $9.3 billion, helped by deposit growth and by reinvesting its structural hedge at higher yields. Part of the profit increase comes from a comparison: the same quarter last year carried $1.4 billion in legal provisions. Lower credit losses also helped.

Costs and targets

Operating expenses fell 12% to $8.8 billion, mostly because those legal provisions did not recur. Excluding notable items, expenses rose amid inflation and heavier technology spending. HSBC said it remains on track for operating expense growth of about 1% in 2026, though strong business performance could mean extra performance-related pay and modestly higher cost growth.

The bank kept its forecast for banking net interest income of at least $46 billion in 2026. It repeated its target of a return on average tangible equity of 17% or higher from 2026 through 2028, excluding notable items, and expects revenue to grow every year through 2028, with 5% growth that year compared with 2027.

It has already bought back the $1 billion announced with interim results and expects to complete another $1 billion before full-year 2026 results. The board approved a third interim dividend of 10 cents per share.

Source: CNBC