By Selena Li and Lawrence White
HONG KONG/LONDON, Oct 27 (Reuters) - HSBC on Tuesday reported a jump in quarterly profit, but revenue came in below estimates in part due to slower growth at its wealth business, dragging down shares in the lender by 6%.
Europe's largest bank reported pretax profit surged 32% to $9.6 billion for the July-September quarter, in line with estimates and launched a share buyback of up to $1 billion, the same amount as the previous quarter.
But revenue undershot analyst forecasts
for $19 billion with growth of 5% to $18.6 billion.
The slide in the bank's Hong Kong-listed shares underscores how recent strong results from European lenders have increased investors' expectations for performance, even as the impact of the Iran war on inflation and interest rates makes the environment for banks tougher. The shares remain up 9% for the year to date.
"There is sometimes a market expectation that we upgrade guidance or targets," CFO Pam Kaur told reporters on a conference call when asked about the share drop.
Revenue for HSBC's wealth division was flat at $2.7 billion. That compared with 15% and 23% year-on-year revenue growth in the first two quarters.
Analysts at Citi and Jefferies said the results were slightly underwhelming, though both said underlying trends in HSBC's wealth balances and private banking suggested the business performance was healthier than the top-line revenue figure suggested.
BRITAIN'S BANKS POISED FOR TAX HIKES
HSBC benefited from the absence of legal provisions booked in the same quarter a year earlier. It also said expected credit losses tumbled 17% to $800 million, thanks to a reduction in charges linked to Hong Kong's real estate sector as well as its UK and Mexican wealth businesses.
HSBC said it is on track to meet its core profitability targets through to 2028, in a further sign of how the region's lenders have sustained robust profits in recent years.
The strong performance has increased calls from activist groups in HSBC's home market of Britain for tax hikes on banks in finance minister John Healey's first budget, due on Wednesday.
Bank bosses have lobbied hard to avoid such an increase in sector levies, arguing it would curb lending and make Britain less competitive.
The bank clarified regulatory capital reforms known as Basel 3.1 would benefit its core capital ratio by up to half a percentage point, where previously the bank had described a 'modest benefit' from the reforms.
HSBC announced an interim dividend of $0.1 per share, the same as the previous quarter.
(Reporting by Selena Li in Hong Kong and Lawrence White in London; Editing by Edwina Gibbs)
