HSBC Profit Growth Misses, Plans $1 Billion Buyback — Update

By Kosaku Narioka

HSBC Holdings reported slower-than-expected quarterly profit growth, sending shares lower despite its announcement of a new share buyback of up to $1 billion.

The London-based bank said Tuesday that earnings for the three months ended September were supported by growth in banking net interest income and lower expected credit losses. The year-earlier bottom line was weighed by a $1.1 billion provision for a lawsuit tied to Bernie Madoff's multibillion-dollar Ponzi scheme.

Pretax profit rose for its Hong Kong business, its U.K. business and its corporate and institutional banking business, while that of its international wealth and premier banking business fell. Quarterly profit missed analysts' estimates.

HSBC also said it will start a share buyback of up to $1 billion, which it expects to complete by the time it announces 2026 results.

Under Chief Executive Georges Elhedery, HSBC has been undergoing a broad strategic overhaul, cutting costs and streamlining operations.

"As we simplify HSBC, we are creating greater capacity to invest, grow and deliver strong returns for our shareholders," Elhedery said.

Shares listed in Hong Kong fell more than 5% after the results, trimming year-to-date gains to about 10%.

In recent months, HSBC has agreed to sell its Egypt retail banking business to Emirates NBD, its $25 billion Australian home and personal loan portfolio to private-equity firm Blackstone, and its Singapore life and health insurance business to Allianz for $2.1 billion.

Elhedery has also been pushing the lender to focus on its strengths: retail banking in the U.K. and Hong Kong, acting as a bridge to global markets for large companies, and helping wealthy clients with their finances.

The London-based bank in January completed a nearly $14 billion bid to buy out other shareholders in Hang Seng Bank, a smaller Hong Kong lender it had long controlled, as it seeks to bolster operations in one of its home markets.

HSBC said in September that Chief Financial Officer Pam Kaur would step down in 2027 and that a search for her successor is under way. Kaur assumed the role in January 2025, becoming the first female CFO in the bank's history.

For the third quarter, net profit rose 45% from a year earlier to $7.09 billion, undershooting the estimate of $7.24 billion in a poll of analysts by data provider Visible Alpha.

Net interest income--the difference between interest earned on loans and that paid on deposits--rose 6.0% to $9.31 billion. HSBC continues to expect banking net interest income of at least $46 billion this year.

The lender booked expected credit losses and other impairment charges of $832 million in the third quarter, smaller than $1.01 billion in the year-earlier period.

Pretax profit rose 32% to $9.63 billion. Its international wealth and premier banking business's pretax profit dropped 13% to $1.1 billion.

Write to Kosaku Narioka at kosaku.narioka@wsj.com

(END) Dow Jones Newswires

October 27, 2026 02:29 ET (06:29 GMT)