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Speaker 1: Yes, very pleased to say.

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Speaker 2: We are joined by the CEO of HSBC, nol Quinn

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Speaker 2: on that pre tax profit coming in for the most

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Speaker 2: recent quarter seven point seventy one billion, as you said,

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Speaker 2: a little bit below the estimates, but the three billion

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Speaker 2: dollar buyback is a standout.

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Speaker 1: No, what do these results? Good morning? No, what are

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Speaker 1: do these results to the morning time?

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Speaker 2: Do you think about the prospects of the bank in

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Speaker 2: the quarters ahead?

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Speaker 3: Well, I'm very pleased in that we've reported twenty nine

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Speaker 3: point four billion dollar profit for the first nine months

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Speaker 3: of this year, as you say, seven point seven four

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Speaker 3: Q three. That puts us on a return on tangible

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Speaker 3: equity of around seventeen percent for the nine months. Very

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Speaker 3: pleased with the three billion dollar buy back that we've

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Speaker 3: announced today, up to three billion dollars. That takes it

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Speaker 3: to seven billion for the full year. And I'm also

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Speaker 3: pleasing we've announced another ten cents dividends. In terms of

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Speaker 3: the slight miss that people have talked about, I do

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Speaker 3: want to draw attention to the fact we we booked

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Speaker 3: some treasury losses on our on some treasury instruments because

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Speaker 3: we are seeking longer duration, higher yielding treasury instruments, and

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Speaker 3: that loss of six hundred million that we booked in

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Speaker 3: Q three will be fully recovered over subsequent quarters. So

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Speaker 3: that's all about our hedging strategy rather than an economic loss.

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Speaker 3: It's a timing difference between a loss today and future

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Speaker 3: profits over subsequent quarters. I think we're well positioned. We

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Speaker 3: have a good momentum in the business, and I think

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Speaker 3: that's evidence in our wealth performance. Our revenue was up

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Speaker 3: six percent in the quarter, our trading assets or wealth

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Speaker 3: balances were up twelve percent, I think, and we took

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Speaker 3: in around about thirty four billion dollars of net new

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Speaker 3: invested assets in the quarter, bringing our total growth in

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Speaker 3: on netnew invested assets to around about seventy seven billion

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Speaker 3: for the past twelve months. So that's good momentum in

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Speaker 3: diversifying our revenue stream.

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Speaker 2: Now on the buyback, it does come in higher than

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Speaker 2: the estimate billion US dollars. You know this better than

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Speaker 2: most investors always want more? Is their scope for Moreno.

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Speaker 3: Well, listen, we've got very strong capital generation at the moment,

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Speaker 3: as you can see in today's results. We've also announced

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Speaker 3: whether when we sell our Canadians business in Q one,

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Speaker 3: it's our intention to do a further special dividend in

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Speaker 3: Q one of twenty one since and then we'll consider

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Speaker 3: what we do with the remaining proceeds of that disposal.

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Speaker 3: So I think we've got good capital generation this year

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Speaker 3: and good capital generation prospects for the next twelve to

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Speaker 3: twenty four months as well. I think we're in a

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Speaker 3: good position to reward our shareholders for their patients and loyalty.

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Speaker 3: Over the past few.

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Speaker 2: Years on the Canadian business, there has been pushedback from

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Speaker 2: the opposition party, the main opposition party, the Conservative Party

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Speaker 2: in Canada, around RBC taking over this Canadian business.

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Speaker 1: What gives you the confidence You've.

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Speaker 2: Reiterated you think the deal does get done by the

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Speaker 2: first quarter of next year. What gives you then that

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Speaker 2: that indeed does come to pass.

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Speaker 3: We're having good dialogue with the Canadian authorities and the regulators.

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Speaker 3: We're confident that the deal will close in Q one

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Speaker 3: of next year, and we continue to work on that basis.

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Speaker 2: I want to talk a little bit about the China

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Speaker 2: part of the story as well. Now, you did put

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Speaker 2: book some charges there of around what half a billion

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Speaker 2: US dollars in terms of provision charges on some of

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Speaker 2: the losses there and you've talked about in the statement

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Speaker 2: the uncertainty in the commercial real estate market of China.

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Speaker 1: How do you see that story evolving? Is it fair

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Speaker 1: to assume.

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Speaker 2: That further charges of about that size and that scope

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Speaker 2: are going to be coming through in the quarters ahead.

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Speaker 3: Well, I think we signaled at the end of last

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Speaker 3: year that we had a plausible downside scenario of potential

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Speaker 3: for an extra one billion dollars of ECLS on our

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Speaker 3: China real estate exposure. If you look at what we've

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Speaker 3: done in Q three half a billion, so it's what

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Speaker 3: we took in the first half. We poked around about

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Speaker 3: eight hundred and million of that one billion plausible downside.

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Speaker 3: There is the potential for a top up to that

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Speaker 3: and book the remaining of the billion in Q four.

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Speaker 3: But I think we're relatively comfortable with where we sit

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Speaker 3: at the moment and our provisions and by the end

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Speaker 3: of this year will have been well provided on our

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Speaker 3: exposures in China. Clearly, it's an evolving situation. We'll keep

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Speaker 3: it under review, but we think we're going to be

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Speaker 3: in a good position by the end of this year.

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Speaker 2: And our provisioning and what is your team on the

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Speaker 2: ground in China telling you about when they think the

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Speaker 2: commercial real estate crisis is going to end, is going

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Speaker 2: to bottom out at least there's twenty twenty four a

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Speaker 2: realistic prospect. Now, what is your sense at this point?

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Speaker 3: Yeah, I mean, I think the market, the commercial real

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Speaker 3: estate market in China has has had a huge policy correction,

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Speaker 3: and I think we are at the bottom of the market.

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Speaker 3: But it will take quite a while for that market

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Speaker 3: to recover and regain um. So I'm not expecting a

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Speaker 3: massive reversal in that sector in the next twelve months

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Speaker 3: or so, but I do expect it to be a

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Speaker 3: gradual improvement from where we are. I am encouraged by

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Speaker 3: some of the policy measures that were announced recently. They

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Speaker 3: will take time to have effect, so I'm not expecting

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Speaker 3: a rapid turnaround, but I do think that we're at

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Speaker 3: the bottom of the market and we'll now have to

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Speaker 3: have a slow recovery. And I think that is a

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Speaker 3: very determined slow recovery, because I don't think that the

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Speaker 3: authorities would have done what they've done with policy correction

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Speaker 3: then to do a quick reversal from here.

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Speaker 2: Operating expenses up two percent, No part of that down

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Speaker 2: to technology investments. Part of that down to a performance

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Speaker 2: related pay. How do you see the cost picture evolving

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Speaker 2: in the quarters ahead, Well, let me just clarify.

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Speaker 3: For the nine months here today, our operating expenses are

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Speaker 3: actually down two percent on a reported basis year on year,

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Speaker 3: and in the quarter they were up one percent Q

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Speaker 3: three to Q three. But what we did is we

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Speaker 3: set ourselves a target, because last year we had some

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Speaker 3: one off restructuring charges. We set ourselves a target of

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Speaker 3: keeping our cost growth to around about three percent. Now

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Speaker 3: in the quarter, we've signaled that we have going to

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Speaker 3: move that three percent to four percent because we have

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Speaker 3: allowed some additional digitization and it spend to come into

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Speaker 3: the P and L. Let's around about a percent or

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Speaker 3: three hundred million, And we have signaled that potentially in

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Speaker 3: Q four, because of the very strong trading performance of

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Speaker 3: the business, we may well top up our variable pay

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Speaker 3: by an extra one percent or three hundred million. Now,

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Speaker 3: I just want to put that into the context of

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Speaker 3: a business that's reported twenty nine point four billion profit

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Speaker 3: in the first nine months of this year. We think

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Speaker 3: they are two sensible decisions to take. Continue to invest

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Speaker 3: in technology and digitization and reward our people for what

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Speaker 3: has been a very strong performance in the year and

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Speaker 3: over the past three or four years in restructuring the bank.

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Speaker 3: And that goes alongside what we're doing with dividends and

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Speaker 3: buybacks for our shareholders.

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Speaker 1: Very focused on cost.

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Speaker 3: Sorry, Tom, we do remain very focused on cost discipline,

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Speaker 3: and we're really trying to drive our investment in cost

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Speaker 3: into digitization and technology rather than just headcount and headcount growth.

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Speaker 3: But we remain with a very strong cost discipline.

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Speaker 1: Okay, I need to ask you about that.

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Speaker 2: The geopolitics at the moment, of course, the Israel Amas conflict.

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Speaker 2: You are the biggest international lender in Israel. Has the conflict,

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Speaker 2: has the crisis in that part of the world. Has

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Speaker 2: it impacted the business? Has it impacted operations for HSBC

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Speaker 2: in Israel? Are you changing anything on the ground then

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Speaker 2: or well.

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Speaker 3: It's heartbreaking to see what's taking place in Israel and

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Speaker 3: in Gaza. The loss of innocent lives is asolutely heartbreaking.

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Speaker 3: We are not changing our strategy in Israel. We're not

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Speaker 3: changing our strategy in the Middle East. We will continue

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Speaker 3: to support our people, our clients in these extremely difficult times.

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Speaker 3: Most of our clients and people have been affected directly

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Speaker 3: or indirectly by what's taking place, and for that reason,

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Speaker 3: we'll do everything we can to support them. We all

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Speaker 3: hope that there will be a political solution to try

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Speaker 3: and de escalate and contain this situation, and that that

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Speaker 3: can be forthcoming.

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Speaker 1: NOL.

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Speaker 2: On the macro front, a number of big central banks,

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Speaker 2: of course, making their decisions this week, the BOE, the FED,

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Speaker 2: the BOJ. What is your sense of where we are

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Speaker 2: in the rate cycle? You in the sense that we

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Speaker 2: are now at peak rates? Are you in the higher

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Speaker 2: for longer camp? What is your assessment?

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Speaker 3: Yeah, I think what's coming around the corner in the

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Speaker 3: next few days is probably a hold position, because I

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Speaker 3: do think we're at a level of interest rates now

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Speaker 3: that we need to give them time to work on

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Speaker 3: the inflationary environment. So I do believe it will behold.

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Speaker 3: I do believe it's higher for longer because I do

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Speaker 3: think there are underlying inflationary pressures still in the global

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Speaker 3: economy as a consequence of supply chain repositioning. The unit

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Speaker 3: economics of supply chains, I'm not as favorable today because

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Speaker 3: of supply chain repositioning as there were a few years ago.

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Speaker 3: So I think it will be a lot higher for longer.

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Speaker 2: And of course the rate environment has to be factoring

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Speaker 2: when you're thinking about acquisitions. You've made the number of

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Speaker 2: bolt on acquisitions no over the last few years. Yeah,

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Speaker 2: do you continue to see appetite? Are their prospects out

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Speaker 2: there still and kind of what is the size and

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Speaker 2: scope of any deals you may be looking at.

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Speaker 3: Yeah, I do think there are still opportunities and most

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Speaker 3: of our acquisitions have been around revenue diversification and skills acquisition,

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Speaker 3: you know, particularly in our wealth business, particularly in Asia,

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Speaker 3: bringing in new distribution capabilities, bringing in new products capabilities,

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Speaker 3: evidence in the deal we've agreed with Citybank on their

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Speaker 3: China wealth business. That's all part and parcel of our

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Speaker 3: revenue diversification strategy and allows us to accelerate our growth opportunities,

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Speaker 3: particularly across Asia. I think there'll be boltons rather than

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Speaker 3: significant acquisitions. I think it's right to continue to build

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Speaker 3: out capabilities via boltons, and what I look at it

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Speaker 3: as is acceleration of organic growth supporting what is a

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Speaker 3: core strategy for doing it faster and more effectively.

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Speaker 2: No Quinn of HSBC on those third quarter results and

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Speaker 2: projecting ahead as well for the bank, Thank you very

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Speaker 2: much for your time.