HSBC (NYSE:HSBC) reported third-quarter revenue growth of 5% and a 10% increase in profit before tax excluding notable items, while reaffirming its full-year guidance and announcing an up to $1 billion share buyback.
Group CFO Pam Kaur said revenue rose to $18.7 billion in the quarter, while profit before tax reached $10 billion on the same basis. Notable items reduced reported profit by $0.4 billion during the period. Earnings per share excluding notable items increased 17%, helped partly by lower minority interests after the privatization of Hang Seng Bank.
“It has been another positive quarter,” Kaur said, adding that the bank remained confident in meeting the targets set out at its full-year results.
Broad-based revenue and deposit growth
HSBC said all four of its businesses increased deposits and each delivered annualized return on tangible equity above 17%, excluding notable items. Year-to-date annualized return on tangible equity was 18.8%, up 1.1 percentage points from a year earlier.
Deposits increased by $105 billion over the past 12 months, including held-for-sale balances. Banking net interest income increased $0.6 billion year over year to $11.7 billion, supported by balance-sheet growth in loans and deposits, rate increases, structural hedge benefits and day-count effects.
The company maintained its full-year banking net interest income outlook of at least $46 billion. Kaur said higher interest rates remain positive for banking net interest income, though the pace of incremental benefit slows beyond the 3% to 4% rate range that she described as a “sweet spot” for banks.
HSBC highlighted increasing competition for deposits in Hong Kong and the United Kingdom. In Hong Kong, customers shifted further from current and savings accounts into time deposits as rates increased, with time deposits accounting for 38% of the mix in the quarter. Kaur said HSBC expects its time-deposit mix to remain better than the market average and said deposit growth remains incrementally positive for net interest income.
In the U.K., management said retail deposit competition had increased, but described the financial impact as less material than in Hong Kong. HSBC cited its low loan-to-deposit ratio and high proportion of instant-access deposits as factors supporting its flexibility.
Transaction banking and wealth trends
Corporate and Institutional Banking was the standout revenue contributor among HSBC’s businesses, according to Kaur. Wholesale transaction banking fee and other income increased 11% year over year, while total wholesale transaction banking revenue increased $0.8 billion, or 12%.
- Trade fees rose 5%, driven by growth in guarantees in Asia and the U.S.
- Payments revenue increased 4% on higher volumes and card fees.
- Security services fee and other income rose 3%, supported by new mandates and higher market valuations.
- Foreign-exchange revenue increased 19% amid higher market volatility and client demand.
In wealth, Asia net new money totaled $38 billion in the quarter, bringing year-to-date flows above $95 billion. Global net new money was $41 billion. The Asia figure included $14.5 billion of foreign currency non-resident deposits gathered in India, though Kaur noted that the program closed at the end of August and would not produce further new inflows.
Private banking revenue increased 16%, supported by mandate growth and higher trading activity. Investment distribution revenue rose 7% on higher mutual fund and structured-product sales. Asset-management growth in assets under management was offset by margin compression.
Wealth fee and other income was flat year over year, largely because prior-year insurance gains did not recur and because of strategic transactions, including U.K. Life and French Life. Kaur said the company views wealth as a long-term growth opportunity rather than providing quarterly or annual growth targets.
Credit, costs and capital
HSBC recorded a third-quarter expected credit loss charge of $0.8 billion, equivalent to an annualized 31 basis points of loans and advances. The bank maintained its full-year 2026 credit guidance of around 45 basis points, saying it saw no specific concern for the fourth quarter but was retaining the outlook given the longer quarter and the timing of its reporting process.
Hong Kong commercial real estate produced a very low net charge during the quarter, and management said overall performance in the portfolio remained broadly stable.
Cost growth was 1% year over year on a target basis. HSBC said it had delivered $0.2 billion of simplification savings during the quarter, bringing total savings to $1.9 billion against its $2 billion half-year target. Its target cost baseline, updated for foreign exchange, is $33.9 billion.
Kaur said the company may consider modestly higher variable compensation if strong business performance continues, with any decision to be made after full-year results are known. HSBC did not provide cost guidance for 2027.
The bank’s CET1 capital ratio stood at 13.9%, down 20 basis points during the quarter. HSBC generated 90 basis points of CET1 capital in the period and continued to accrue for a 50% dividend payout. Management estimated that Basel 3.1 implementation from Jan. 1, 2027, would provide a 40- to 50-basis-point CET1 benefit, subject to portfolio changes, model refinements and regulatory permissions.
HSBC said it remains committed to a 50% dividend payout ratio, organic growth investments and share buybacks as a preferred residual method of distributing capital. The bank reiterated targets for revenue growth of 5% by 2028, annual return on tangible equity of at least 17%, and dividend payments equal to 50% of earnings per share excluding material notable items and related impacts.
About HSBC (NYSE:HSBC)
HSBC Holdings plc is a global banking and financial services company headquartered in London. Its principal subsidiary, The Hongkong and Shanghai Banking Corporation, was established in 1865 to facilitate trade between Europe and Asia. HSBC’s shares trade on the New York Stock Exchange in the form of American depositary receipts under the symbol HSBC.
The company provides personal and wealth banking, commercial banking, corporate and institutional banking, investment banking, global markets, and asset management services.
