HSBC UK posted pre-tax profit up 54% to $1.7bn (£1.4bn) in the third quarter, boosted by higher mortgage sales and “the positive impact of a higher interest rate environment”.
The UK arm of the international bank says mortgage loans rose by $5bn (£4.1bn) in the first nine months of the year, compared to a year ago.
This contrasted with lending across the global group, which fell by $24bn in the three months to the end of September, compared to the second quarter of the year.
The bank says this “reflects a reduction in commercial banking as demand in Asia remained muted, although mortgage balances in [its] wealth and personal banking [division] were higher, notably in Asia and the UK”.
Its group net interest margin – the difference between what it charges to borrowers and what it pays out to savers – lifted by 19 basis points came to 1.70% compared with a year ago, but slipped by 2bps compared to the previous quarter.
The bank said this “reflected an increase in customers migrating their deposits to term products, particularly in Asia”.
Major UK banks have reported a run of strong profits buoyed by Bank of England base rate rises that have lifted 14 times since December 2021 to 5.25%.
However, investors are concerned about tougher competition for savers’ cash and potential loan defaults in a cost-of-living crisis have weighed on the sector.
Lloyds Banking Group, Barclays, NatWest and Santander all reported results last week.
HSBC chief executive Noel Quinn says: “There was good broad-based growth across all businesses and geographies, supported by the interest rate environment.”
The lender added it would carry out a share buyback of up to $3bn, which will take place up until the company’s full-year results on 21 February.
Across the global business, pre-tax profit jumped by $4.5bn to $7.7bn in the third quarter, partly driven by the reclassification of $2.3bn of impairments on the planned sale of its retail banking operations in France.
However, this fell short of analyst’s expectations of $8.1bn of profit over the period.
Shares edged 0.3% higher to 603p in mid-morning trading.
