San Francisco Frontiers - HSBC profit jumps on higher rates, lower costs

Net profit grew 45.5 percent to US$7.1 billion in the three months to end-September compared with the same quarter a year earlier, the London-headquartered lender said in an earnings statement.

HSBC is cutting jobs amid global restructuring at the Asia-focused bank under chief executive Georges Elhedery, who took over the helm two years ago.

"As we simplify HSBC, we are creating greater capacity to invest, grow and deliver strong returns for our shareholders," Elhedery said Tuesday.

Pre-tax profit in the third quarter climbed 32 percent to $9.6 billion, with group revenue increasing by nearly five percent to $18.6 billion.

However, Tuesday's results left investors disappointed.

Shares in London shed more than seven percent to head losses on the top-tier FTSE 100 index, mirroring a fall in Hong Kong.

"Investors already know that higher interest rates are benefiting the banks so HSBC's big increase in third-quarter profits was not enough to win them over," said Russ Mould, investment director at AJ Bell.

"HSBC is under pressure to bring costs down and while there is clear evidence of progress... the market is likely to keep management's feet to the fire," he added.

Banks in the UK are meanwhile bracing for a widely-expected windfall tax in Britain's budget update on Wednesday, with reports suggesting that the extra funds could be used to help households cope with surging energy bills.

- Job cuts amid AI drive -

Restructuring and cost-saving actions by HSBC, which include selling off a series of business units this year, have saved the bank $1.4 billion since 2025, it said Tuesday.

This enabled the bank to issue a dividend of 10 US cents per share alongside plans for a fresh $1.0-billion stocks buyback.

HSBC is meanwhile increasingly adopting artificial intelligence across its operations.

The lender told AFP this month that it was "in a consultation period" after the Financial Times reported that hundreds of jobs were at risk in its wealth management business from the bank's adoption of AI.

"We know that AI will change how work is done across industries, and of course it will impact some roles, it will transform other roles," chief financial officer Pam Kaur said on a media call Tuesday.

"Beyond that, there's nothing specific in a number term that I want to share, or indeed have to share at the moment," she added.

British rival Barclays last week announced plans to cut roughly five percent of its global workforce by the end of the year in an AI efficiency drive.

HSBC on Tuesday added that it continues "to target year-on-year growth in revenue" through to 2028.

G.Miller--SFF