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HSBC share price rallies as lender posts ‘encouraging results’

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Shares in HSBC Holdings (LON:HSBA) have jumped in London this morning as Europe’s biggest lender updated investors on its third-quarter performance, posting a rise in profits, as it continued to benefit from its focus on Asia. The group bank has continued the banking reporting season following results by blue-chip peers Barclays (LON:BARC), Lloyds (LON:LLOY) and RBS (LON:RBS) last week.

As of 08:41 BST, HSBC’s share price had added 4.10 percent to 629.80p, lending support to the benchmark FTSE 100 index which currently stands 0.81 percent higher at 6,995.68 points. The group’s shares have lost more than 16 percent of their value over the past year, as compared with a near seven-percent dip in the Footsie.

‘Encouraging results’

HSBC announced in a statement today that its reported profit before tax had climbed 28 percent year-on-year to $5.9 billion in the third quarter, reflecting revenue growth and lower operating expenses. The Asia-focused lender’s common equity tier 1 ratio stood at 14.3 percent. The group’s reported revenue for the first nine months of the year rose five percent to $41.1 billion driven by a rise in deposit revenue across the company’s global businesses, primarily in Asia.

“These are encouraging results that demonstrate the revenue potential of HSBC,” HSBC’s chief executive John Flint commented in the statement.

Analysts weigh in

Proactive Investors reports that Jefferies had maintained its ‘buy’ rating on HSBC, noting that the lender’s profits were ahead of expectations and that the revenue performance was strong.

JP Morgan Chase, however, downgraded its forecast for Europe’s biggest bank.

“The risks as we see it are continued weakness, particularly in the capital markets as well the wealth management business given some of the macroeconomic trends that we see in the region,” James Sullivan, head of Asia ex-Japan equities research at JP Morgan Chase, told CNBC’s ‘Street Signs’.

As of 09:04 GMT, Monday, 29 October, HSBC Holdings plc share price is 630.20p.

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