HSBC Holdings Plc, Europe’s largest bank, reported a bigger-than-estimated jump in third-quarter profit as costs related to fines and legal settlements declined.
Pretax profit rose to $6.1 billion from $4.6 billion a year earlier as operating costs fell, the London-based lender said in a statement on Monday. Earnings on that basis exceeded the $5.2 billion average estimate of 14 analysts compiled by the bank. HSBC reiterated that a decision on its domicile may not come until next year.
Chief Executive Officer Stuart Gulliver, 56, unveiled a three-year plan in June to pare back a sprawling global network, shut money-losing businesses and eliminate as many as 25,000 jobs after compliance costs surged. The third-quarter result benefited from a $1.4 billion decline from a year earlier in fines, settlements and redress for U.K. customers, while weakness in revenue capped earnings.
“The outlook for HSBC has become less negative,” Castor Pang, head of research at Core-Pacific Yamaichi Hong Kong, said by phone. At the same time, Pang said a turnaround in the bank’s performance isn’t yet assured.
HSBC’s shares in Hong Kong fell 0.6 percent as of 2:17 p.m. local time, compared with the benchmark Hang Seng Index’s 0.9 percent decline. The stock has fallen 18 percent this year.
Operating costs decreased 19 percent from a year earlier to $9 billion. That was below analysts’ average forecast of $9.4 billion. While net operating income fell 4 percent to $15.1 billion, that exceeded an average estimate of $14.8 billion.
“Our cost-reduction measures are beginning to have an impact,” Gulliver said. “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 bank, which has been generating more than two-thirds of its earnings in Asia, is assessing whether to move its headquarters away from London. Pretax profit in Asia rose 2 percent to $3.5 billion in the quarter from a year earlier.