On October 29th, HSBC Holdings (00005. HK) released its "report card" for the first three quarters of this year: 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 months of 2023.
From a single quarter perspective, 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 Holdings stated that this is mainly due to revenue growth from its wealth management and personal banking businesses, as well as its foreign exchange, equity, and global debt markets businesses under its global banking and capital markets business.
In terms of dividends, HSBC Holdings stated that the board of directors has approved the distribution of a third dividend of $0.1 per share.
We have once again delivered good quarterly performance, 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 generation allowed us to announce $4.8 billion in distributions for the third quarter, increasing the total number of distributions announced since 2024 by $18.4 billion, "said HSBC CEO Adam Smith.
HSBC Holdings also announced plans to launch a share buyback of up to $3 billion, expected to be completed within four months (i.e. before the release of its 2024 full year results). In 2024 1025, HSBC Holdings has completed the $3 billion share buyback announced during the release of its interim results. The group cancelled 1.0981 million repurchased shares on October 28th.
HSBC Holdings announced its restructuring plan last week, simplifying its geographical divisions into Eastern and Western markets, sparking market speculation that HSBC will deploy a spin off. Regarding this, Ai Qiaozhi stated that the restructuring is mainly aimed at improving the efficiency of strategy execution, rather than preparing for the spin off of businesses, and "restructuring is not a prelude to spin off".
In Aiqiaozhi's view, international networks are the unique advantage of the group, which can meet the cross-border development needs of customers. Simplifying geographical settings does not involve any geopolitical considerations, but is mainly based on simplifying operations and responding to customer needs faster and simpler.
Ai Qiaozhi stated that there is no target set for Hong Kong manpower in the existing restructuring plan. It stated that the reform is more aimed at ensuring a more direct connection between Hong Kong and the group, with a more direct focus internally, and importantly, by reducing governance levels internally, enabling Hong Kong to take swift action in external market competition that requires quick action.
On October 22nd, HSBC Holdings announced that it is simplifying its organizational structure into four major businesses, namely "Hong Kong", "UK", "Corporate and Institutional Wealth Management", and "International Wealth Management and Premier", in order to accelerate the implementation of its priority strategy.
Ai Qiaozhi stated that the change will reduce the overlap of programs and decisions under the current architecture, and can generate greater relevance and flexibility in serving customers. The functional departments of the group will be restructured to support four new businesses. In order to align with a more streamlined structure, HSBC will establish a new Group Operating Committee consisting of 12 members, which will replace the Group Executive Committee with 18 members and become the main executive decision-making body of HSBC.
Ai Qiaozhi admitted 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.
In terms of potential asset sales in the future, Aiqiaozhi stated that the group has already confirmed the sale of its South African business and German private banking business in September, and will take selective actions in the future to ensure compliance with the group's strategy. Additionally, HSBC will not only sell assets, but also explore acquisition opportunities.
Goldman Sachs has released a research report stating that HSBC Holdings' third quarter performance exceeded expectations, and it is estimated that the stock price will have a positive reaction to this. Goldman Sachs maintains its "buy" rating on HSBC Holdings, with a target H-share price of HKD 82. HSBC Holdings recorded a pre tax net profit of $8.7 billion in the third quarter, which was 16% higher than the bank's expectations; The higher than expected income was mainly driven by non bank net interest income. In addition, HSBC Holdings announced a new round of $3 billion repurchase plan, which also exceeded the bank's expectations. The management maintains the guidance for the next two years, which is a return on tangible equity (ROTE) of 14% to 16%, and a bank net interest income of approximately $43 billion for fiscal year 2024. It is expected that the credit cost for fiscal year 2024 will be between 30 and 40 basis points, consistent with market expectations.