HSBC {{ m-tag option="price" ticker="HSBC" currency="USD" }}, Europe's largest bank by assets, reported a significant surge in its Q3 2023 earnings. The bank's profit after tax skyrocketed by 235% year-on-year to $6.26 billion, compared to $2.66 billion in the same period last year. However, the figures fell short of market expectations, adding a layer of complexity to the bank's financial narrative.

Key Financial Metric:
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The bank's profit before tax for the quarter rose by $4.5 billion to $7.7 billion, primarily due to a higher interest rate environment. Revenue also increased to $7.71 billion, up from $3.23 billion a year ago. Despite these impressive numbers, HSBC missed the analysts' estimates of a $6.42 billion profit after tax and $8.1 billion profit before tax.

Special Factors Affecting Profit:
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HSBC attributed part of the increase to a $2.3 billion impairment in Q3 2022 related to the planned sale of its retail banking operations in France. However, $2.1 billion was reversed in Q1 2023 as the transaction became less specific.

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Rising Operational Costs & Inflation:
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HSBC indicated that costs will likely increase by up to 5% this year, excluding an acquisition. This is more than its previous goal of a 3% rise, primarily due to growing technology and operational spending. The bank is also considering boosting staff bonuses in the fourth quarter.

Market Performance & Share Buyback:
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The bank's Hong Kong-listed shares were down 0.26% after the earnings release. HSBC announced a fresh $3 billion share buyback, lifting the total buybacks announced this year to $7 billion.
HSBC also dished out the third interim dividend payout this year of 10 cents per share, bringing the total payout this year to 30 cents per share.

HSBC's Q3 revenues rose 2% in the Global Banking and Markets division. This was a more robust performance than rival Barclays' 6% drop, as HSBC's large payments business benefited from higher interest rates.

Wealth Business & Asset Growth:
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New flows into its wealth business gained traction, with $34 billion of net new invested assets in the quarter. Its wealth balance sheet grew by 12% compared to last year.

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