HSBC Holdings plc - Interim Management Statement

Press Release   •   Nov 05, 2010 10:11 GMT

At the end of the third quarter, HSBC's pre-tax profits for the year to date remained well ahead of 2009 . Pre-tax profits for Q3 2010 were also well ahead of Q3 2009, although the run rate achieved was lower than in the first half of 2010.

The balance of earnings in the quarter reaffirmed the benefits of our universal banking model and the sustainability of our strategy. Personal Financial Services continued to perform ahead of our expectations, driven by lower loan impairment charges. In Commercial Banking, the principal source of revenue growth compared with the preceding quarter came from strong levels of economic activity centred on emerging markets, and lower loan impairment charges drove improved profitability year on year. Global Banking and Markets' performance in the quarter was robust, although trading activity was lower, reflecting seasonal factors and more subdued market sentiment and conditions. Outside North America, profitability remained well spread, with Asia accounting for the largest share of pre-tax profits in the quarter.

Credit experience continued to improve, with quarterly loan impairment charges reaching their lowest level since early 2007. Loan impairment charges were lower in all regions and customer groups compared with Q3 2009. As in the first half of the year, the US accounted for the largest share of the improvement in the quarter, with delinquency volumes declining as loan balances were managed down and early-stage delinquency improved, most notably in the cards business.

In a period of uneven economic growth and patchy demand for credit, HSBC continued to enhance its strong position in emerging markets through its ability to connect customers across national and regional borders. We made good headway in winning new customers, with Commercial Banking and Premier customer numbers growing in line with the first half run-rate. We announced the acquisition of the retail and commercial banking businesses of The Royal Bank of Scotland Group in India, which we expect to complete in the first half of 2011, and we completed the divestment of the British Arab Commercial Bank and announced the sale of Eversholt Rail Group, with the transaction expected to complete in Q4 2010.

Overall, lending to customers was ahead of levels at the end of both 2009 and the first half of 2010, despite continuing to manage down our US consumer finance business and certain other higher risk retail portfolios in Latin America and the Middle East. Building on progress in the first half of the year, we expanded customer lending in each of our emerging market regions during the quarter and we increased our cross-border trade revenues. Muted demand for credit, reflecting concerns over the US recovery and measures taken to address European fiscal and debt burdens, meant revenues in developed markets remained generally constrained. This was also reflected in a less buoyant trading environment which, together with lower balance sheet management income, contributed to a reduction in total Group revenues for Q3 2010 and the year to date compared with the equivalent periods in 2009.

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The HSBC Group
HSBC Holdings plc, the parent company of the HSBC Group, is headquartered in London. The Group serves customers worldwide from around 8,000 offices in 87 countries and territories in Europe, the Asia-Pacific region, the Americas, the Middle East and Africa. With assets of US$2,418 billion at 30 June 2010, HSBC is one of the world's largest banking and financial services organisations. HSBC is marketed worldwide as 'the world's local bank'.