HSBC Pre-Tax Profit grew more than expected due to lower regulatory fines cost
Due to the lower cost of regulatory fines, HSBC's pre-tax profit in the third quarter increased 32 percent to $6.1 billion from $4.6 billion in the same period last year, beating analysts' expectations of $5.2 billion.
According to BBC News the bank announced in June that it plans to cut up to 25,000 jobs and sell assets as a strategy to cut cost to provide better returns for its shareholders. Cass Business School's Peter Hahn points at lesser fines and lower costs as the major reasons for HSBC's impressive third quarter report. The bank has been working to increase sales on not very profitable businesses in Brazil and sold them for $5.2 billion in August.
"Our cost-reduction measures are beginning to have an impact on our cost base," according to HSBC chief executive Stuart Gulliver. "There is more to achieve on costs and we expect the measures we have already taken to have a further impact in the fourth quarter."
The International Business Times reported that HSBC is currently reviewing whether it will retain its London headquarters due to concerns on too much tax and regulation. Long term stability is also an important factor in the bank's decision to move its domicile. It has been stationed in the UK since it moved out from Hong Kong back in 1992. The bank will report where it may transfer along with the announcement of its full year income.
According to Bloomberg Business, Chairman Douglas Flint said the board are examining further information and is looking for "fresh areas of interest." The bank has been generating most of its income in Asia. Its adjusted pretax profit in Asia went down 4 percent to $3.5 billion in the third quarter, while in Europe it had a 44 percent drop to $969 million.
Finally, since the bank has been pressured by regulatory challenges and fines in its US and European markets, it will be focusing on its growing business in Asia.