HSBC cashes in on Apac activity, increases US sales

HSBC posted a profit before tax of US$5.4 for the third quarter of 2021, an increase of US$2.3 billion year-on-year.

All regions where profitable in Q3 2021, with Asia contributing US$3.3 billion to the reported profit before tax, while HSBC UK reported its profit before tax increased by US$1 billion to US$1.5 billion.

Adjusted revenue was down one percent to US$12.2 billion, primarily reflecting unfavourable market impacts in life insurance manufacturing in wealth and personal banking (WPB) and lower revenue in markets and securities services (MSS).

‘Notwithstanding these factors, we have seen continued good performances in areas of strategic focus, including wealth and trade finance products,’ stated Noel Quinn (pictured), the group’s CEO.

HSBC issued structured products on the primary market in six different jurisdictions in the third quarter of 2021, according to SRP data.

In the US, it had a 4.4% share of the structured products market in Q3 2021. The bank collected US$1.1 billion from 256 products, up 17% in sales volumes compared to the equivalent quarter last year (Q3 2020: US$936m from 273 products).

Its products where available via various distribution channels, including those of Morgan Stanley Wealth Management (28 products), Raymond James (24), UBS (23), InspereX - formerly Incapital (20), and Bank of America. The latter achieved sales of US$245m from just 14 products, including autocallable step-up notes on the Russell 2000 index, which, with sales of US$32.7m, was HSBC’s best-selling product in the quarter.

In Europe, the bank was the manufacturer behind 14 autocallable plans that sold a combined £22m (US$30m) in the UK. The structures were exclusively linked to the FTSE 100 and marketed via Walker Crips (11) and Meteor (three).

In Germany, where it operates as HSBC Trinkaus & Burkhardt, the bank issued some 35,462 listed turbo certificates that can be traded on the secondary market via the exchanges of Frankfurt and Stuttgart (Q3 2021: 25,540 products). The vast majority of these were linked to a single stock (26,110 products), of which those of Biontech (529 products), Shop Apotheke Europe (438), and Jinkosolar (405) where the most used. The Dax, seen in 3,159 products was the most used index, followed by Dax/Xdax 1,343 and Nasdaq 100 (1,132).

The highest primary market issuance was seen in Asia, where the bank sold 4,844 products split between Hong Kong SAR (4,652 products), China (142 products), and Taiwan (50 products) (Apac Q3 2020: 958 products).

Issuance in Hong Kong SAR – which increased sixfold YoY – was evenly distributed between equity-linked investments (2,481 products) and deposits (2,171). Payoffs focused on reverse convertibles (2,300), often combined with knockout and worst-of option features, while dual currency was also frequently used (1,745).

Hong Kong SAR’s underlyings in Q3 2021 were dominated by FX rates (2,171 products), which was remarkable as in the prior year quarter there were none.

Some 1,585 products were tied to share baskets (1,585), and there were also products on single shares (604), hybrids (221), and exchange-traded funds (71). The USD/CNH (635) was the most popular currency pair in the quarter while Tencent Holdings (474) was the preferred share.

Celine Herweijer, the group’s new chief sustainability officer, joined in July 2021 to lead the net zero and wider sustainability agenda. Herweijer (right), who joined from PwC, reports to Quinn. She is a group executive committee member and chairs the group ESG steering committee.

As of 30 September 2021, the group’s total assets of US$3 trillion were US$7 billion lower on a reported basis and included adverse effects of foreign currency translation differences of US$39 billion.

Liabilities on the group’s consolidated balance sheet included debt securities in issue worth US$82.9 billion (end-December: US$95.5 billion).

Click the link to read the full 3Q 2021 earnings release and presentation.