Profit before tax of $6.6bn is 1% ahead of us ($6.5bn) and a 17% beat against consensus ($5.6bn). Perhaps unsurprisingly, the stand-out performer is Hong Kong which contributed $3.5bn (53%) of today’s result, delivering particularly strong QoQ/YoY growth across Retail Banking & Wealth Management and Global Banking & Markets. BUY reaffirmed.

• The statutory result, a profit before tax of $6.6bn (+18% YoY) is achieved after taking a higher-than-expected $1.2bn conduct charge. Underling PBT of $6.1bn is precisely in line with our equivalent forecast ($6.1bn). Relative to our expectations, u/l revenues of $15.4bn are $0.2bn (1%) below, costs of $9.1bn are $38m (0.4%) better, impairments of $869m are $43m (5%) better and Associates of $0.7bn are $0.1bn (20%) better. The line-by-line consensus expectations are more opaque, but we believe that for consensus, the cost performance is the key area of positive surprise.

• The Hong Kong result; PBT $3.5bn, included a previously announced $1.0bn pre-tax gain on the latest selldown of Hang Seng’s stake in Industrial Bank, but within HK, Retail Banking & Wealth Management (+7% QoQ/+15% YoY) and Global Banking & Markets (+8% QoQ/+50% YoY) were stand-out performers.

• The Global Banking & Markets result is encouraging. u/l PBT of $2.5bn is up 20% YoY with u/l revenues of $5.0bn (+4% YoY/-4% QoQ).

• Capital progression is excellent. The CET1 ratio increases 0.4% QoQ to 11.6% (InvE 11.5%), and the disposal of HSBC’s business in Brazil adds a further 0.5%, making 12.1% pro-forma, (albeit with an unquantified accounting loss).

• Buy recommendation and 635p RoE-g/CoE-g derived target price reaffirmed.