HSBC Q3 FX revenues decline

By:
Russell J. Dinnage
Published on:

Foreign exchange revenues at HSBC, the fifth-largest bank in the Euromoney FX survey, fell in the third quarter year on year, but the market remains the most profitable venture of the bank’s global markets operation.

HSBC reported that its nets operating income (NOI) from FX markets at the end of the last quarter was $736 million, down from Q2’s FX NOI of $776 million and down year on year from $925 million on September 30 2011.

Overall, in the nine months ending September 30, HSBC’s FX NOI was at $2.469 billion, up from September 30 2011 when the cumulative revenues were $2.442 billion.

The bank says that "a fall in [FX] market volatility" was the reason for the fall in the Q3 FX NOI figures, which are the bank’s operating income in the market after operating expenses are deducted but before income taxes and interest are taken out.

In total, HSBC reported a higher year-on-year NOI Q3 figure from all of its Global Banking and Markets operations of $4.319 billion, compared with $3.498 billion in September 2011.

Quarter on quarter, the bank performed well in credit markets in Q3 seeing a $220 million gain to $285 million compared with June 30, but lost out in rates markets – with NOI down 40% from Q2 to $363 million – and in securities services, where NOI was down 9% from Q2 to $381 million.

But, in the nine months ending September 30, year on year Q3 the bank saw NOI increase in both credit and rates market activity, with a $344 million gain in credit markets from $311 million in 2011 and a $1.054 billion rise in rates compared with $1.114 billion last year.

Securities services Q3 NOI fell by only $85 million year on year, from $1.284 billion in September 2011.

HSBC’s fall in year-on-year Q3 FX revenues is in line with the trend on the rest of the street, with a number of leading FX banks reporting declining income from their FX operations in the three months to the end of September.