On October 29th, HSBC Holdings Limited released its third quarter 2024 profit data on the Hong Kong Stock Exchange.
Data shows that HSBC's revenue increased by $17 billion in the third quarter, an increase of $800 million or 5% compared to the third quarter of 2023. In the first nine months of this year, HSBC Holdings' revenue increased to $54.3 billion, an increase of $1.3 billion or 2% compared to the first nine months of 2023.
HSBC Holdings CEO Adam Smith said, "We have once again delivered good quarterly results, reflecting the effectiveness of the group's strategy. Revenue growth was strong during the quarter, and wealth management and wholesale trading banking businesses performed well. Strong organic capital investment allowed us to announce a $4.8 billion distribution for the third quarter, increasing the total distribution announced since 2024 by $18.4 billion
After the data was released, HSBC Holdings' stock price rose, closing at HKD 71.6 per share on the same day, an increase of 3.69% for the day.
After tax profit of 24.4 billion US dollars in the first three quarters
Financial report data shows that in a single quarter, HSBC Holdings' revenue increased by $17 billion in the third quarter, an increase of $800 million or 5% compared to the third quarter of 2023. Pre tax profit increased by $800 million and $8.5 billion compared to the third quarter of 2023; After tax profit was $6.7 billion, an increase of $500 million from the third quarter of 2023.
HSBC stated that this is mainly due to the revenue growth of its wealth management and personal banking businesses, as well as its foreign exchange, stock, and global debt markets businesses under its global banking and capital markets business.
In the first nine months of this year, HSBC Holdings' revenue increased to $54.3 billion, an increase of $1.3 billion or 2% compared to the first nine months of 2023. The pre tax profit increased by $700 million and $30 billion compared to the first nine in 2023. After tax profit was $24.4 billion, an increase of $100 million from the first nine in 2023.
From the perspective of the three major business sectors, based on a fixed exchange rate benchmark, the pre tax profit of wealth management and personal banking is $9.7 billion, a decrease of $1.7 billion from the first nine in 2023.
HSBC stated that this was due to an impairment related to the sale of its French retail banking business, which was reversed in the first nine months of 2023 for $2.1 billion (the impairment was subsequently reclassified in the fourth quarter of 2023 and the sale was completed in November 2024), but this item did not reappear in the current period.
The revenue of this business segment was $21.7 billion, a decrease of $1 billion or 4%. It is worth mentioning that HSBC's wealth management business, which has been focused on in recent years, has continued to achieve impressive growth. Based on a fixed exchange rate benchmark, the revenue from wealth management business was $6.7 billion, an increase of $900 million, or 16%. The life insurance business revenue increased by 300 million US dollars, with a growth rate of 28%. However, the revenue from individual banking services decreased year-on-year to $14.6 billion, a decrease of $800 million or 5%.
In terms of industrial and commercial finance, based on a fixed exchange rate benchmark, the pre tax profit is 9.5 billion US dollars, a decrease of 1.3 billion US dollars compared to the first nine in 2023. HSBC stated that the main reasons for the decrease in revenue were the discontinuation of the $1.7 billion gain confirmed from the acquisition of UK Silicon Silver in the first nine months of 2023, the impact of the sale of its Canadian silver business, and an increase in operating expenses.
In terms of global banking and capital markets, based on a fixed exchange rate benchmark, the pre tax profit was $5.7 billion, an increase of $1 billion or 21% compared to the first nine in 2023. HSBC stated that this was mainly driven by a revenue increase of $1 billion (an increase of 8%), particularly in the strong performance of its stock and securities financing business.
In terms of enterprise centers, based on a fixed exchange rate benchmark, the pre tax profit is 5.2 billion US dollars, an increase of 2.9 billion US dollars compared to the first nine in 2023. This sector mainly reflects the impact of acquisitions and disposals, including gains from the sale of Canadian silver business and impairments related to the planned sale of Argentine business.
Plan to launch share buybacks of up to $3 billion
In terms of dividends, HSBC stated that the board of directors has approved the distribution of a third dividend of $0.1 per share.
Regarding share buybacks, in 2024 1025, HSBC has completed the $3 billion share buyback announced during its mid-term performance announcement. HSBC plans to launch another share buyback of up to $3 billion, expected to be completed within three days (i.e. before the release of its full year 2024 results).
In terms of business restructuring, HSBC expects to complete the sale of its Argentina business in the fourth quarter of 2024. As of September 30, 2024, HSBC Group's assets amounted to $3.1 trillion.
In terms of the annual target, HSBC maintains its guidance of net interest income from its banking business of approximately $43 billion for 2024, and its cost growth target for 2024 remains at approximately 5% (compared to 2023 and calculated based on the benchmark). In the first three quarters, the net interest income of the banking business was 32.8 billion US dollars, a decrease of 500 million US dollars, a decrease of 2%, due to the increase in the balance of commercial customer deposits and loans invested in trading accounts, which could only partially reduce the decline in net interest income.
HSBC specifically mentioned a series of supportive policies recently introduced in China. In 2024, the People's Bank of China, the State Administration for Financial Regulation, and the China Securities Regulatory Commission announced multiple policies aimed at promoting growth and economic development. This includes monetary stimulus, measures to strengthen the real estate market and capital market, as well as capital adjustment measures for the most advanced commercial banks.
HSBC emphasized that these measures have increased volatility by the end of the third quarter of 2024, driving up customer activity, particularly in wealth management, stocks, and global foreign exchange businesses in Hong Kong. The bank will continue to monitor the impact of these measures on the fourth quarter.
It is worth noting that the organizational structure of HSBC Holdings' three major business segments and regional businesses will be reorganized next year.
On October 22nd, HSBC Holdings announced on the Hong Kong Stock Exchange that it is simplifying its organizational structure into four major businesses to accelerate the implementation of priority strategies. Starting from January 1, 2025, HSBC will operate through four business segments, including Hong Kong, UK, Corporate and Institutional Wealth Management, International Wealth Management, and Premier.
Aiqiaozhi said, "HSBC is a closely connected global enterprise. The plan we announced last week aims to strengthen the group's leadership position and market share in areas with competitive advantages, provide customers with the best in class excellent products and services, and establish a more streamlined, dynamic, sensitive, clearly defined, and decisive institution. We will immediately carry out relevant plans and announce more details as part of our business briefing when we release our full year results
Previously, there were frequent rumors about HSBC streamlining its personnel. On October 29th, according to media reports, HSBC Holdings CEO Ash Ai emphasized that the ongoing strategy will not change and there is no intention to split the group through the plan. He believes that international connections are the unique advantage of the group, and simplifying geographical settings does not involve any geopolitical considerations. It is mainly based on simplifying operations and responding to customer needs faster and simpler.
Ai Qiaozhi said that one of the goals of the plan is to simplify some senior positions, cut redundant roles, and there will be senior resignations in the coming months, but there is currently no specific target for the number of layoffs. It reiterated that the group will maintain cost control discipline and will announce the cost savings that can be achieved by simplifying the organizational structure in February, and believes that the results will be seen soon.