HSBC's net interest margin widened to 2.22% in 3Q

Hopes now pinned on QE tapering.

According to Maybank Kim Eng, HSBC's net interest margin (NIM) widened from 2.17% in 1H13 to 2.22% in 3Q13, due to better lending spreads in the UK and Latin America. Management expects QE tapering to benefit NIMs; thus Maybank raises its 2014 NIM forecast from 2.0% to 2.07%

Here's more from Maybank:

Excluding a positive exchange rate impact, HSBC’s 3Q13 loan growth was 1.7% QoQ, mainly driven by personal loans in the UK, commercial loans in HK and the US and a rise in reverse repo balances. We raise our 2014 loan balance estimates by 1%.

Net operating income at the Global Banking and Markets (GBM) division fell 13% QoQ in 3Q13, mainly on declines in forex and principal investment income as well as valuation losses on derivatives. We cut our 2014 estimates of non-interest income (excluding net fees) by 6.3%.

Strong cost savings; limited provisions for regulatory costs. HSBC achieved USD0.4b of additional cost savings across all regions in 3Q13, taking total annualised cost savings to USD4.5b since 2011, close to its 2013 target of USD4.6b. It plans to achieve additional cost savings of USD2-3b over 2014-16.

However, expenses for the UK customer redress programmes rose from USD0.1b in 2Q13 to USD0.44b in 3Q13.

HSBC has not made further provisions for: (i) securities litigation related to the acquisition of HSBC Finance in 2002 (maximum claims of USD3.5b); and (ii) the litigation related to US MBS programmes over 2005-07 (maximum claims of USD1.6b). We project total regulatory costs of USD2.1b for 2013 and USD0.5b for 2014.