Europe's largest bank, HSBC, increased its third-quarter 2026 pretax profit by 32 percent to $9.63 billion. In the same period last year, profit had been $7.30 billion. Revenue rose 5 percent to $18.62 billion, the bank said on Tuesday.

Despite the jump in profit, the stock market reacted negatively. HSBC shares, listed in Hong Kong, lost 5.5 percent in after-hours trading after the results were announced and fell to their lowest level in almost 20 weeks.

One reason for the disappointment was analysts' expectations. Pretax profit came in slightly below the Bloomberg consensus estimate of around $9.7 billion. Revenue also came in below expectations of just under $19 billion. Wealth management revenue stagnated at $2.7 billion after rising by 15 percent and 23 percent in the ⁠previous quarters, respectively⁠.

Interest business posts strong gains

The result was driven in particular by the interest business. Net interest income rose 6 percent to $9.31 billion. Higher customer deposits and the reinvestment of hedging transactions at better yields contributed to this.

At the same time, HSBC had to set aside less money for potential loan losses. Credit impairment charges fell 17 percent to $832 million. The main reasons included lower charges related to commercial real estate in Hong Kong as well as lower credit risks in the UK and Mexico.

However, the profit comparison also benefited from a special factor. In the same quarter last year, a provision of around $1.1 billion related to the Bernard Madoff fraud case weighed on earnings.

The cost-income ratio improved significantly from 56.6 to 47.4 percent. The annualized return on average tangible equity rose from 12.3 to 17.7 percent.

Another $1 billion for share buybacks

Alongside the quarterly results, HSBC announced a new share buyback program worth up to $1 billion. It is set to be completed by the time the 2026 annual report is published.

In addition, the board approved a third interim dividend of 10 US cents per share. In total, the bank plans to distribute around $2.7 billion to shareholders. The CET1 ratio fell from 14.1 percent at the end of June to 13.9 percent at the end of September.

Bank restructuring continues

Under CEO Georges Elhedery, HSBC is increasingly focusing on its core markets in Asia and the UK. At the same time, the bank is scaling back activities in selected international business areas and simplifying its organization.

HSBC is making particularly deep changes in wealth management. In the UK business, numerous advisory and management positions are to be eliminated as part of greater automation and the use of artificial intelligence.

The bank is also revamping its compensation system for senior executives and wants to tie a larger share of compensation to performance.
HSBC employs around 206,000 people worldwide, including more than 700 in Switzerland at its Geneva and Zurich locations.

Forecast confirmed

For the full year 2026, HSBC is sticking to its previous targets. In banking, net interest income is expected to reach at least $46 billion. The bank aims to limit adjusted operating cost growth to around 1 percent.

For 2026 to 2028, HSBC continues to target an adjusted return on tangible equity of at least 17 percent.
Despite the decline over recent weeks, the Hong Kong-listed share is still up by just under 10 percent since the start of the year. With a market capitalization equivalent to around 260 billion euros, HSBC is the most valuable bank outside China and the United States.