For banks, it’s clear that the boost from higher interest rates is almost spent. As a result, their control of costs will be watched even more closely. HSBC, for example, has raised its cost-growth guidance for this year to 5 per cent on a constant currency basis, up from the 3 per cent it expected in June. A surprise rise in operating expenses in the third quarter meant that its pre-tax profits missed market expectations, despite more than doubling to $7.7 billion as rate rises continued to feed through to higher income.
Yet this year’s marginal rise in costs shouldn’t be overplayed. Since Noel Quinn took over as HSBC’s boss, the group’s cost-efficiency ratio has improved to 49.3 per cent, from 67.7 per cent over
