Our two home markets, the UK and Hong Kong, contributed more than half of the Group’s underlying profit before tax in the third quarter and year-to-date. Our businesses are well positioned to capitalise on improving economic conditions in these markets. This is significant because their profit contribution considerably influences the performance of HSBC.
At a Group level, HSBC’s reported and underlying profit before tax increased in the third quarter compared with the same period in 2012. Reported profit before tax was USD4.5 billion, up 30 per cent, and underlying profit was USD5.1 billion, up 10 per cent.
Revenue was stable in the quarter, influenced by the mixed global macroeconomic picture, set against a backdrop of our continuing implementation of global standards and ongoing regulatory uncertainty.
Hong Kong performed well and continues to benefit from its close economic relationship with mainland China
Hong Kong performed well and continues to benefit from its close economic relationship with mainland China.
We continued to remodel our business in North America to improve profitability and growth. The ongoing recovery of the US housing market may provide further opportunities to accelerate the run-down of our US consumer mortgage portfolio.
Global Banking and Markets performed resiliently, notwithstanding a challenging environment. This reflects our distinctive business model with its broad international focus and our emphasis on customer connectivity, product capability and balance sheet strength.
We continued to focus on managing our costs, bringing the total annualised sustainable savings achieved since 2011 to USD4.5 billion. This is well in excess of the target we set out to achieve by the end of 2013. We grew underlying revenue 9 per cent faster than costs for the first nine months.
We also made further progress towards simplifying and restructuring HSBC. In particular, we recently completed the sale of our Panama business.
Our capital position strengthened during the quarter with an improvement in the core tier 1 ratio to 13.3 per cent.
We see some signs of a broadening recovery around the world. Indications are that economic growth in mainland China is stabilising with positive implications for Hong Kong and the Rest of Asia-Pacific. The US should continue to grow, albeit at a low rate by historical standards. The UK should see positive growth and outperform the eurozone. We expect GDP growth in Latin America to remain slow, although the Mexican economy should strengthen in 2014.
Our forecasts for global growth remain at 2.0 per cent in 2013 and 2.6 per cent in 2014.
We remain focused on delivering organic growth, streamlining our businesses and implementing global standards, which we believe will produce a progressive dividend.