Customers are chasing higher-rate products, and that's bad news for banks like HSBC
By Steve Goldstein
Customers in Hong Kong have been moving to higher-rate products from HSBC.
Shares of banking giant HSBC Holdings fell as much as 7% on Tuesday as the lender revealed that customers are increasingly turning to higher-rate products.
The bank (HSBC) (UK:HSBA) reported third-quarter net interest income 2% below expectations as the proportion of its deposits in time deposits - higher-rate products like certificates of deposit - reached 38% in Hong Kong, which is close to its historical peak around 40%.
"In terms of deposit behavior, when interest rates are higher, we have seen also in previous times that there's a shift to more time deposits," CFO Pam Kaur said on a conference call.
The bank saw the same behavior at work in the U.K., a market where it is choosing not to be as competitive to protect margins.
Neither Kaur nor any of the analysts on the call said that AI agents are driving any of the higher deposit-seeking behavior.
The investor response came even as HSBC reiterated profit and revenue targets for this year, 2027 and 2028 and said it would buy back up to $1 billion in shares.
-Steve Goldstein
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(END) Dow Jones Newswires
10-27-26 0602ET
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