If HSBC’s next chief executive, John Flint, has been called the “John Major of banking”, one dreads to think what that makes his chairman and “foil” Mark Tucker – given the low-key prime minister’s surprisingly racy relationship with one former cabinet colleague and his nicknames for others with which he was less enamoured.
This morning, however, the bank’s shareholders can only wait and look for clues as to the harmoniousness of the Flint-Tucker coupling – as the former does not replace Stuart Gulliver until February. But, in HSBC’s first quarterly results since Mr Tucker took over as chairman, there was some mood music – and it made for easy listening.
Significantly, deposit income rose across its three main global businesses, boosting adjusted revenue for the quarter by 2 per cent to $13bn – ahead of HSBC’s consensus broker estimate of $12.7bn.
HSBC highlighted growth from its international network – with a 7 per cent increase in transaction banking product revenue and a 14 per cent rise in revenue synergies – and said its “pivot to Asia” was now driving over 70 per cent of group adjusted profit so far in this financial year.
Analysts had interpreted the choice of Mr Tucker as HSBC’s first-ever externally appointed chairman as a sign that the bank was seeking a more “hard driving” and growth-oriented approach. He had previously spent eight years overseeing rapid expansion at Asian insurer AIA. He has already told investors that HSBC – given its major presence in the fast-growing economies of Asia – should have a higher return on equity than the 8.8 per cent achieved in the first half of the year.
But some observers believe the choice of Mr Flint’s to work alongside him – continuing a 150-year tradition of appointing chief executives from within – is a sign that strategy will not diverge much from that of Mr Gulliver, which was to shed risky regional offshoots, boost returns to shareholders, and centralise decision making.
Today, though, growth was to the fore. HSBC posted $14.9bn in reported pre-tax profits for the nine months to September, up 41 per cent from the same period last year, boosted by a solid set of results for the first half of this year. Adjusted profits before tax for the period rose 8 per cent to $17.4bn.
Mr Gulliver, the outgoing chief executive, said:
We maintained good momentum in the third quarter, with higher revenue in our three main global businesses. We also continued to make good progress with the strategic actions we set out in 2015. Our international network continued to deliver strong growth in the third quarter, and our pivot to Asia is driving higher returns and lending growth, particularly in Hong Kong.
Analysts at Shore Capital believe the bank should be assisted by higher rates in the US and Hong Kong – with every percentage point rate rise adding $3.5bn-$4bn to net interest income and 15-20 per cent to profits.
However, HSBC’s reported pre-tax profit for the quarter fell 1 per cent year on year to $5.4bn after adjusting for one-offs and currency moves – a little below consensus forecasts.
Another internationally-focused pursuer of growth with a “hard driving” style – Ivan Glasenberg of commodities group Glencore – was also sounding positive this morning. His oil and metals trading arm has been enjoying a fruitful year – so much so that the group has upgraded its full-year guidance for the division for the third time since January.
Glencore said its trading arm is now set to earn between $2.6bn to $2.8bn following a strong performance in the three months to September – better than the previous guidance of $2.4-2.7bn. Mr Glasenberg had indicated in August that higher prices were good for its metals trading operations as they increased arbitrage opportunities.
Glencore’s oil division, led by British-born trader Alex Beard, has also become a major player in shipping crude from Iraqi Kurdistan through oil pre-payments. However, Mr Glasenberg warned last week that Kurdish shipments, which are piped to Turkey’s Mediterranean port of Ceyhan, may fall or be delayed.
Mining operations were a little less positive, too. Glencore lowered its full year production guidance for copper by 20,000 tonnes to 1.31m because of power problems in Zambia and difficulties at its operations in the Democratic Republic of Congo. It also cut its zinc forecast by 25,000 tonnes to 1.1m tonnes because of lower grades in the Americas.
And, finally, easyJet has confirmed an opportunistic international expansion. Over the weekend it said it had signed an agreement with Air Berlin to acquire part of its operations at Berlin Tegel Airport for €40m.
Buying these operations will mean easyJet enters into leases for up to 25 Airbus A320 aircraft, offers employment to Air Berlin flying crews and takes over other assets including airport slots.
EasyJet said the deal was consistent with its strategy of investing in “strong number one positions” in Europe’s leading airports. Via Tegel, it will be able to operate to and from destinations across Germany and the rest of Europe. This is in addition to easyJet’s existing base at Berlin Schönefeld. Announcements of new routes and services will be made in due course and the airline plans to operate a full schedule from summer season 2018.
FT Opening Quote, with commentary by Matthew Vincent, is your early Square Mile briefing. You can sign up for the full newsletter here.
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