by Selena Li and Lawrence White

HONG KONG/LONDON (Reuters) – The worst may be over for China’s real estate market, HSBC said on Monday, although the bank recorded a new write-down of $500 million in its accounts, linked to this heavily burdened sector. indebted, having helped bring its third quarter profit below market expectations.

HSBC announced a new share buyback program and saw its profit more than double over the July-September period in a context of rising interest rates but the depreciation linked to the real estate sector in China and the anticipation of Rising costs partly overshadowed these results, leading to a decline in shares on the London Stock Exchange.

The stock lost 2.25% at 1:45 p.m. GMT.

“I think the major correction (in China’s property market) is over and it is now a gradual work over a long period of time,” said Noel Quinn, chief executive of HSBC.

Fears over China’s real estate sector are weighing on foreign banks that lend to developers in China, especially since Standard Chartered reported an unexpected drop in profit due to a nearly $1 billion negative impact of its activities related to this sector in China.

Georges Elhedery, HSBC’s chief financial officer, said he expected “a few more quarters of difficulty while the sector adjusts”, but added that the longer-term outlook was more positive.

The bank’s quarterly results show it is struggling to offer its investors the returns they expect amid high inflation and pressure on borrowers.

HIGHER COSTS

Although HSBC reported a 240% jump in its taxable profit in the third quarter, to $7.7 billion, this result was lower than analysts’ expectations, due to higher costs. The average estimate of analysts surveyed by HSBC was $8.1 billion.

HSBC said its full-year costs were likely to rise 5%, excluding the acquisition of Silicon Valley Bank’s UK unit, compared with a previous target of 3%, with technology spending and hypothesis of a revaluation of the bonuses granted to its employees in the fourth quarter.

HSBC has said it wants to complete a $3 billion share buyback program by next February, in addition to previous similar announcements made this year, for a total amount of $7 billion.

“Costs will probably be the controversial issue,” said Joe Dickerson, an analyst at Jefferies, although he added that the share buyback was $1 billion higher than he had expected.

(Reporting Selena Li in Hong Kong and Lawrence White in London; Jean Terzian and Diana Mandiá)

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