Tuesday preview: HSBC third-quarter numbers eyed

(Sharecast News) - Third-quarter results from HSBC will be the main highlight on the UK corporate calendar on Tuesday. UBS expects much of the coverage of the results to focus on the recently-announced offer for the 37% Hang Seng minorities.

It noted that on the day the announcement was made, HSBC's market cap fell by around $10bn, roughly the same amount of CET1 as the bank is looking to invest in the minority buyout.

"We think this is an overreaction: we expect low risk operating, liquidity, capital, growth and ROTE upside from the transaction in the medium term," UBS said.

"Buybacks don't make any bank better - though they are a powerful tool for return and capital optimisation - whereas we think this acquisition will add value to the group."

Operationally, UBS said that within the Q3 results it will be looking in particular at the outlook for banking net interest income versus 2Q25 guidance of circa $42bn, volume growth, progress on business restructuring and cost optimisation measures, as well as growth in Wealth.

It will also be looking at the rationale and impacts of the privatisation plan for Hang Seng Bank, and impairment trends, particularly linked to HK CRE.

On Monday, HSBC announced that it will take a $1.1bn impairment charge in its third-quarter results after losing an appeal in a long-running lawsuit in Luxembourg related to Bernard Madoff's multibillion-dollar Ponzi scheme.

HSBC Securities Services Luxembourg is defending a claim brought by Herald Fund SPC for the restitution of securities and cash lost in the Madoff fraud, but was denied an appeal in respect of the securities restitution claim.

HSSL will now pursue a second appeal and, if unsuccessful, will contest the amount it is required to pay in subsequent proceedings before the Court of Appeal, HSBC said.

HSBC provided custodial and admin services to several funds that invested with Bernard L. Madoff Investment Securities LLC, and in 2009 was sued by Herald Fund SPC for the restitution of assets lost in the Ponzi scheme.

The $1.1bn provision will also dent the bank's CET1 capital ratio by 15 basis points.

However, since the impairment will be classified as a "material notable item" on its accounts, it will not impact return on tangible equity or dividend payments to shareholders.

"Given the pendency of the second appeal and the complexities and uncertainties associated with determining the quantum of restitution, the eventual financial impact could be significantly different," HSBC said in a statement.

First-half results from Airtel Africa and Bulmers owner C&C will also be in focus, along with a Q3 production report from Anglo American and a Q3 update from Evoke.

In Europe, quarterly results are due from Novartis, Ferrovial and Moncler, among others.

Tuesday October 28

INTERIMS

Airtel Africa

INTERNATIONAL ECONOMIC ANNOUNCEMENTS

Consumer Confidence (US) (20:30)

GFK Consumer Confidence (GER) (13:30)

House Price Index (US) (19:30)

Q3

HSBC Holdings

GMS

Ten Lifestyle Group

FINALS

Ultimate Products

EGMS

Datang International Power Generation Co Ltd.

AGMS

Aberforth Geared Value & Income Trust, Aberforth Geared Value & Income Trust, Achilles Investment Company Limited Npv, Brooks Macdonald Group, Galileo Resources, Seen, Seen

TRADING ANNOUNCEMENTS

Auction Technology Group , Evoke (DI)

UK ECONOMIC ANNOUNCEMENTS

BRC Shop Price Index (06:31)

FINAL DIVIDEND PAYMENT DATE

European Opportunities Trust