Rising interest rates were among the factors responsible for pushing up earnings at the banking group.

HSBC today said that its wealth and personal banking profit before tax surged to $3.327 billion in the third quarter of 2023 from $113 million a year earlier, helped by rising interest rates. For the nine months ended 30 September, the business division’s pre-tax profit rose to $22.9 billion from $13.99 billion.

Global private banking revenue was $200 million, rising 15 per cent as a result of the positive impact of rising interest rates on net interest income, the Hong Kong/London-listed group said in a statement today. 

“Our wealth business also gained further traction, attracting $34 billion of net new invested assets in the quarter and growing wealth balances by 12 per cent compared with last year,” Noel Quinn, HSBC’s chief executive, said.

Across the entire group, HSBC said pre-tax profit in the third quarter more than doubled compared with a year ago to $7.7 billion, up $4.5 billion, boosted by rising interest rates. The profit figure also increased following a $2.3 billion impairment of a year ago – linked to the planned sale of French retail operations – was reversed in the first three months of this year to the tune of $2.1 billion as the completion of that deal became less certain.

Revenues rose 40 per cent year-on-year to $16.2 billion in the quarter as rates rose; non-interest income also rose. The bank logged a net interest margin of 1.70 per cent, up 19 basis points from the same quarter in 2022.

The bank said expected credit losses and other credit impairment charges of $1.1 billion were broadly in line with the same quarter of 2022.

Operating costs of $8.0 billion rose 2 per cent on a year ago – the growth was primarily due to higher technology costs, the impact of rising inflation and an increase in the performance-related pay accrual. These increases were partly offset by lower restructuring and other related costs following the completion of the bank's cost-saving programme at the end of 2022.

HSBC said it had a common equity tier 1 capital ratio of 14.9 per cent at the end of the quarter, slightly higher than at the end of June.

Looking forward, HSBC said it remained committed to targeting a return on average tangible equity in the mid-teens for 2023 and 2024, which excludes the impact of material acquisitions and disposals. Net interest income in 2023 is expected to be over $35 billion.

As previously announced, in October, HSBC Bank (China), a wholly-owned subsidiary of HSBC, agreed to buy Citigroup’s retail wealth management portfolio in mainland China. The portfolio comprises about $3.6 billion in assets under management and deposits (as of August 2023), and the associated wealth customers. When the deal is complete, the business will be integrated into HSBC Bank China’s WPB operations. The transaction is expected to complete in the first half of 2024.