Higher interest rates help to more than double HSBC profits

Rising interest rates have sent profits at HSBC soaring as the banking giant set out plans to hand billions more dollars to its shareholders.

HSBC said profits more than doubled to $7.7bn (£6.35bn) in the three months to September from the same period a year ago, although that was below forecasts.

It said it had benefited from higher interest rates which allow it to charge more to lend to people and businesses.

The Bank of England will announce its latest decision on rates on Thursday.

It is widely expected to hold it for a second month at 5.25%. Prior to that, the central bank had raised interest rates 14 times in a row from a historic low of 0.1%.

Other central banks have also been lifting rates - the US Federal Reserve will publish its latest decision on Wednesday - and HSBC said "the higher interest rate environment" had spurred growth globally.

The company expects its net interest income, which is the difference between what it earns from lending money and the interest it pays to savers and depositors, to rise above $35bn this year. In the latest results for the three months to 30 September, it rose to $9.2bn from $8bn in the same period last year.

Banks have been under pressure to pass on higher interest rates to savers, including from Chancellor Jeremy Hunt who said in June that it was "taking too long".

Alicia Garcia-Herrero, chief economist for the Asia Pacific region at investment bank Natixis, said that before interest rates began to increase, banks made relatively little from lending money but still had to make payments to people and businesses that deposited money.

"Let's not forget that banks were in dire shape before because they had no room. So they have gone from no room to lots of room," she told the BBC's Today programme.

HSBC said that it would return a further $3bn to its shareholders, taking the total it will hand back to investors to $7bn this year. It will also pay out dividends.

Although the bank's profit jumped over the past three months, the figure fell short of the $8.1bn expected by analysts.

HSBC's operating expenses rose due, in part, to performance-related pay as well as higher technology costs and the impact of inflation.

Last week, the government announced that a cap on bankers' bonuses will be removed. It will come into force on Tuesday, 31 October nearly a decade after the measure was introduced following the 2008 financial crash.

For the last financial year, HSBC trimmed its bonus pool by 4% to $3.4bn.

The bank, which has its headquarters in London, generates most of its income in Asia.

It said it had taken a $500m hit related to China's crisis-hit property market led by Evergrande.

"We continue to monitor risks related to our exposures in mainland China's commercial real estate sector closely, and there remains a degree of uncertainty in the forward economic outlook, particularly in the UK," it said.

Last week, HSBC's Asia-focused rival Standard Chartered reported an unexpected plunge in its third-quarter profit due to a near-$1bn combined hit from its exposure to China's real estate and banking sectors.