HSBC May Say Pretax Profit Rose 79% on Investment Bank Rebound

HSBC Holdings Plc (HSBA), Europe’s largest lender by market value, may say third-quarter pretax profit rose 79 percent as income from its investment banking unit rebounded.

Profit, excluding acquisitions and disposals and accounting losses from revaluing the bank’s own debt, probably rose to $5.3 billion from $2.96 billion in the year-earlier period, according to the median estimate of seven analysts surveyed by Bloomberg. The lender is scheduled to report earnings at 8:15 a.m. London time on Nov. 5.

Last year, HSBC said pretax profit at the investment bank, led by Samir Assaf, fell 53 percent to about $1 billion amid Europe’s sovereign debt crisis. Securities firms in the U.S. and Europe have posted gains in revenue after European Central Bank President Mario Draghi’s July pledge to defend the euro with “whatever it takes.”

“The investment bank turnaround is absolutely the key,” said Ian Gordon, a London-based analyst at Investec Plc (INVP) who rates the bank a hold. “It’s the main driver year-on-year.”

A HSBC spokeswoman declined to comment. HSBC’s investment bank, its global banking and markets division, may report a 49 percent increase in revenue to $3.11 billion, Credit Suisse analysts led by Amit Goel wrote in a note to clients on Oct. 23.

Deutsche Bank AG this week had a third-quarter profit gain after a rally in bond and stock markets brought a surge in trading income. Its revenue from trading bonds and other products jumped an annual 67 percent in the third quarter.

Goldman Sachs Group Inc.’s fixed-income, currencies and commodities revenue climbed 28 percent from a year earlier and was up 1 percent from the second quarter, according to figures released two weeks ago. JPMorgan’s fixed-income trading revenue excluding accounting adjustments rose 33 percent in the third quarter, while Citigroup Inc.’s increased 63 percent.

HSBC has climbed 27 percent in London trading this year, the fourth-biggest increase in the FTSE 350 Banks index. Standard Chartered Plc, which this week said operating profit in the first nine months of the year climbed less than 10 percent as growth in Asia slows, is up 6.1 percent this year.

                  3Q 2012 Estimate   3Q 2011 Actual   Analysts

Underlying Pretax   $5.3 Billion      $2.96 Billion    7

Adjusted Sales      $16.1 Billion     $15.8 Billion    7

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