HSBC Holdings PLC (LSE:HSBA) shares neared the session close down 2.3% at 943.5p after a volatile session, but recovered some earlier losses as investors digested the latest quarterly update.
UBS described the results as better than expected beneath the surface, with adjusted pre-tax profit 10% above consensus when excluding a hefty $2.1 billion writedown on HSBC’s stake in China’s Bank of Communications (BoCom) and higher restructuring costs.
Income generation stood out, with fee and other income up 11% and net interest income also slightly ahead of forecasts.
Operating costs were in line, supporting a 10% uplift in pre-provision profit.
There were some concerns around higher-than-expected impairment charges, mainly linked to commercial real estate loans in Hong Kong, but these were within guidance and offset by the strength in other parts of the business.
HSBC kept its key medium-term targets unchanged, including a mid-teens return on equity and a 50% dividend payout ratio.
The bank also announced a new $3 billion share buyback, ahead of expectations.
UBS noted that initial worries over loan losses proved unfounded and highlighted the continued growth in fee income and strong capital position as positives for the outlook.