HSBC results hit FTSE bank stocks

HSBC lost ground in early trade on Monday after the bank reported quarterly profit that failed to meet market expectations, largely due to rising costs.

Shares in the biggest London-listed bank fell 2 per cent to 627p after pre-tax profit rose 2 per cent to $4.6bn in the third quarter but missed analysts' expectations of $5.46bn.

The company said operating costs rose 15 per cent to $11.1bn including inflation, compliance and risk-related expenses. The bank added it was to set aside nearly $400m to cover costs of an investigation into its dealings in the foreign exchange market.

This left other banking shares looking vulnerable, with Royal Bank of Scotland down 1.6 per cent to 382p and Lloyds Banking Group off 0.6 per cent to 76.8p.

Overall, the FTSE 100 was flat - down just a couple of points to 6,546.22, supported by airline groups after Irish budget carrier Ryanair raised its profit guidance for the year.

Ryanair's London-listed shares were 8.6 per cent higher at €8.24 after a 32 per cent rise in net profit to €795m in its first half, thanks to higher passenger numbers and lower fuel costs.

Europe's biggest low-cost airline said it now expected net profit for its full-year 2014-15 to come in at between €750m to €770m (£602m), up from previous estimates of €620m-€650m.

Citi raised its target price on Ryanair shares to €9.30 from €8.65 and reiterated its buy rating.

EasyJet was lifted to the top of the FTSE 100, climbing 2.7 per cent to £15.40, while IAG, the parent company of British Airways and Iberia, gained 1.4 per cent to 415.1p.

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