HSBC 86% profit falls on Brazil disposal

HSBC’s third-quarter profits have fallen sharply after it booked a loss from the sale of its Brazilian unit.

The bank’s reported pre-tax profit was $US843 million in the September quarter, down from $US6.1 billion in the same period a year ago, HSBC said in a Hong Kong stock exchange filing on Monday.

HSBC took a $1.7bn loss on the sale of its Brazilian unit, and it also pointed to customer compensation in America and currency moves for the fall in profits.

But adjusted profit, which excluded one-off costs, rose 7% to $5.6bn, higher than analysts had expected.

HSBC earlier this year sold its Brazil unit in a $US5.2 billion deal.

The lender’s core capital ratio, a key measure of financial strength, rose to 13.9 percent at the end of the September quarter from 12.1 percent at end-June, bolstered by a change in the “regulatory treatment” of its investment in China’s Bank of Communications, CEO Stuart Gulliver said in a statement.

Chief executive Stuart Gulliver said:

“Reported profits were down, but adjusted profits were higher than last year’s third quarter in all four global businesses and four out of five regions.”

David Cumming, head of UK equities at Standard Life, said HSBC’s results were “slightly above consensus”, with costs a bit better than expected and its investment banking reasonably strong.

HSBC shares have risen more than 11% since August when it unveiled a plan to spend up to $2.5 billion in the second half to repurchase shares. Shares were up 2.3% in Hong Kong after the earnings announcement.

The bank said it has completed 59% of its share-repurchase plan, which is expected to conclude in late 2016 or early 2017.

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