HSBC reported a sharper-than-expected 86 percent fall in pretax profit for the third quarter as the British lender booked a $1.7 billion loss on the sale of its Brazilian unit and it was also hit by adverse foreign currency movements.
The bank's reported pretax profit was $843 million in the September quarter, down from $6.1 billion in the same period a year ago, HSBC said in a Hong Kong stock exchange filing on Monday.
That was much lower than estimates of $2.45 billion, based on the average of analysts' forecasts compiled by the bank.
HSBC is the last major Britain-based lender to report third-quarter earnings, after Lloyds, Barclays and RBS all showed signs of coping better than expected in the aftermath of Britain's vote to leave the EU.
Adjusted pretax profit, excluding the one-time charges, rose 7 percent during the quarter to $5.6 billion, helped by increased revenue from its global banking and markets business, which houses its investment bank, HSBC said. Its London-listed shares were higher by nearly 5 percent by 11:00 a.m. London time.
The bank said the main differences between reported and adjusted profits are foreign currency translation costs, and significant items, including the operating results for its Brazil business as well as the loss recognized on disposal.
HSBC earlier this year sold its Brazil unit in a $5.2 billion deal.
The lender's core capital ratio, a key measure of financial strength, rose to 13.9 percent at the end of the September quarter from 12.1 percent at end-June, bolstered by a change in the "regulatory treatment" of its investment in China's Bank of Communications, CEO Stuart Gulliver said in a statement.
"This is another action forming part of our ongoing capital management of the group that reinforces our ability to support the dividend, to invest in the business and, over the medium term, to contemplate share buy-backs, as appropriate," he said.
"It also provides us with a significant capacity to manage the continuing uncertain regulatory environment."
HSBC's Hong Kong-listed shares extended gains to trade up about 2.5 percent after the results by 0514 GMT on Monday, compared with the broader Hong Kong stock market's 0.6 percent gain.