HSBC Holdings Plc said it may increase some variable pay, resulting in higher expenses, after it announced a surge in third-quarter earnings.
“We have signaled, potentially in Q4 because of the very strong trading performance of the business, we may well top up our variable pay by an extra 1%, or $300 million,” said Noel Quinn, Chief Executive Officer of HSBC in an interview with Bloomberg Tv’S Tom Mackenzie, adding that the lender wants to reward staff.
The move comes as the UK proceeds with plans to scrap a cap on bankers’ bonuses. The cap limiting bonuses to a maximum of twice a banker’s base pay will be lifted from Oct. 31, Britain’s Prudential Regulation Authority said earlier this month.
Operating expenses for the third quarter were $8 billion, slightly more than consensus estimates, with the growth coming from higher technology costs and an increase in performance-related pay accrual. The lender also said it expects about 4% cost growth versus the previously targeted 3%. HSBC’s costs were an issue for major shareholder Ping An Insurance Group Co.
“We will also consider a potential increase in performance-related pay based on the out-turn of our performance and ongoing execution of our strategy in 4Q23, which would result in a further rise of around 1% in our operating expenses,” the bank said earlier in a statement.
Read Quinn’s comments that China’s commercial real estate market has bottomed out
Third-quarter pretax profit at HSBC jumped to $7.71 billion from a year earlier, missing the $8.1 billion average analyst estimate. It also announced the buyback of up to $3 billion of stock.
For more on the results, analyst call, click here for our TOPLive blog.
(Adds comments from HSBC CEO in second paragraph)
