HSBC Holdings has increased its income outlook and declared its intention to transition into growth mode through its acquisition of Hang Seng Bank in Hong Kong. This strategic shift occurs despite a significant decrease in third-quarter profit, impacted by $1.4 billion in legal charges. HSBC, with a market value of $226 billion, is a global banking and financial services institution. The company provides a wide range of services to personal, commercial, and corporate clients.
HSBC now anticipates a net interest income of $43 billion this year, a $1 billion increase from its June estimate. This revision reflects expectations of slower rate cuts in key markets like Hong Kong and Britain. The bank has also slightly raised its return on equity target to the mid-teens or better, up from a previous estimate of mid-teens. Shares in Europe’s largest bank rose by 3% in London, aligning with gains for its Hong Kong-listed stock and exceeding the performance of the flat FTSE 100 index.
Pretax profit for the third quarter fell by 14% to $7.3 billion, negatively affected by $1.1 billion in charges following an unfavourable ruling in a lawsuit related to Bernard Madoff’s Ponzi scheme. Additionally, HSBC allocated a $300 million provision in response to French authorities’ investigations into European banks’ alleged evasion of dividend tax payments. Despite these challenges, the bank is actively reorganising its operating divisions and streamlining its investment banking units to enhance profitability.
While the search for a new chairperson continues, HSBC’s focus remains on strategic growth and investment. The recent offer of $13.6 billion to acquire the remaining shares in Hang Seng Bank underscores this commitment. Despite concerns about Hang Seng’s exposure to the local property market, HSBC maintains that the deal reflects its openness to growth and investment in areas where it possesses a competitive advantage.
