HSBC shares fell about 6% Tuesday after third-quarter revenue disappointed investors despite a substantial increase in profit.
The bank reported third-quarter pretax profit of approximately $9.6 billion, up 32% from a year earlier and broadly in line with HSBC-compiled expectations.
Expected credit losses declined 17% to $800 million, helped by lower charges associated with Hong Kong real estate and the bank’s UK and Mexican wealth businesses.
HSBC also announced another share repurchase of up to $1 billion and maintained its quarterly interim dividend at 10 cents per share.
Investors nevertheless focused on weaker revenue performance and slower growth in wealth management.
The reaction illustrates how expectations for large banks have shifted. Higher interest rates have supported lending income, but banks also face increasing competition for deposits and pressure to maintain growth as funding costs remain elevated.
HSBC is particularly important as a financial-market indicator because of its extensive operations across Asia and Europe.
The weakness spread into the broader market, with HSBC helping pull Britain’s FTSE 100 and European banking shares lower.
The next question is whether HSBC can maintain profit growth as the benefit from higher interest rates matures and competition intensifies across deposits and wealth management.
Investors will also watch credit quality, particularly in Hong Kong commercial real estate, and whether the bank continues returning capital through additional buybacks.
