Tuesday 8 November 2016

HSBC happy to allocate more capital to investment bank


HSBC is happy to allocate more capital to the group's investment bank, its chief executive has signalled, after a strong performance in fixed income trading helped to lift underlying quarterly results above analysts' expectations.

"We are happy to see risk-weighted assets go back into global banking and markets providing the returns are attractive and above our cost of capital," Stuart Gulliver, HSBC chief executive, told the Financial Times.

He added that the bank had "tons more flexibility and optionality" to potentially buy back more of its shares next year after a jump in its capital buffer thanks to a change in the regulatory treatment of its minority stake in China's Bank of Communications.

Mr Gulliver said he expected HSBC to benefit from a 25-basis-point increase in US interest rates in December "irrespective of who is the winning presidential candidate" in Tuesday's election. He said the bank had done "no scenario planning" for the vote and it was "difficult to predict what the policy outcome of either candidate would be".

A string of one-off items dragged HSBC to a net loss of $204m in the three months to September. It was hit by a $1.7bn loss on selling its Brazil operation, a big negative swing in the value of its own debt, a $1bn restructuring charge and $489m it put aside to cover the cost of the UK payment protection insurance scandal.



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