Russ Mould, investment director at AJ Bell, said: “Having got the bad news out of the way early, with yesterday’s revelation of a provision linked to Bernard Madoff’s Ponzi scheme, HSBC had some good news to deliver to investors with its third-quarter update.
“While the Madoff-linked hit saw profit come in below expectations at a headline level, on an underlying basis the business is performing well and, crucially, somewhat better than the market was expecting.
“A key metric for any bank is net interest income – the difference between what the bank pays out to savers and receives from borrowers in interest – so the boost to guidance here and double-digit quarterly growth are significant.
“They back up CEO Georges Elhedery’s assertion that HSBC is becoming ‘a simple, more agile, focused bank’.
“Slightly higher than anticipated operating costs are a slight negative, and investors will be watching future updates closely to see if this becomes a trend, and exposure to a tricky Hong Kong property market is another risk.
“However, these numbers will give Elhedery a boost after the recent negative reaction to the decision to pause buybacks and use cash to buy out minority investors in Hong Kong’s Hang Seng Bank and the Madoff news.”
Contact details are available to account holders.
Create a free account to get in touch with this expert.