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Start of a trend?: HSBC posted a $3.24 billion net profit for the third quarter, reversing a $204 million net loss in the comparable quarter of 2016, as revenue jumped 36% to $13 billion. The bank said increased investment in its Asia business is starting to pay off.

The question now, the Heard on the Street column says, “is whether this third-quarter result begins a sustainable trend to create the long-term earnings growth that will feed future dividends.” Wall Street Journal here and here, Financial Times here, here and here

Coming soon: President Trump is expected to nominate Federal Reserve Governor Jerome H. Powell as the next chairman of the Fed. An announcement is scheduled for Thursday. New York Times, Washington Post, American Banker

Fed Gov. Jay Powell
President Trump is expected to choose Jerome Powell as the next Fed chair.

In a joint op-ed piece in the New York Times, Stephanie Kelton, a former chief economist for the Senate Budget Committee Democrat staff and a professor of public policy and economics at Stony Brook University, and Paul McCulley, a senior fellow and professor at Cornell University Law School and former chief economist at Pimco, discuss the Fed, what they want in the next chair and related issues.

Wall Street Journal
Going up: A “surprising” thing is going on in the banking industry, Heard on the Street reports: Big banks are paying more on their deposit rates than smaller ones. According to Keefe, Bruyette & Woods, the average cost of interest-bearing deposits at banks like Bank of America and JPMorgan Chase has gone up 18 basis points so far this year, compared to only 10 basis points at large regionals like SunTrust.

“Ordinarily, giants like Bank of America are slower to raise rates, thanks to their strong brand and market positions,” the paper notes. “The difference this time is these banks have been pushing to serve wealthier clients who are more likely to move money around in search of higher yields.”

Coming to America: Vijay Shekhar Sharma, the founder and CEO of Paytm, India’s largest mobile payment app, said he is looking is bring his service to the U.S. “I want to build a product made in India consumed by those … in the developed world,” he said at a conference in Singapore. Paytm, which is backed by Alibaba and SoftBank, plans to use Canada as a testing ground before moving into the U.S.

Different rules: TD Ameritrade founder Joe Ricketts says community banks need to be allowed to again assume their historic role of financing entrepreneurs. “Unfortunately,” he writes in an op-ed, “the crush of regulations that followed the 2008 financial crisis has required community banks to pull back from character-based loans. Rather than hire loan officers, community banks have been forced to hire compliance officers charged with applying regulatory rules, originally developed for money-center banks, to small institutions.”

To fix this problem, he argues, “community banks should be governed by different regulations, enforced by different regulators than those at money-center financial institutions, ones who understand the unique risks small institutions face. With less regulation, community banks could devote a portion of their capital to small-business lending that generates jobs, innovation and growth.”

Hidden attraction: With few legislative victories to show and several positions that are arguably anti-business, the financial markets and the business community nevertheless seem pretty happy with the Trump administration.

“To some extent, the explanation for the love affair lies elsewhere, in something many in Washington either find boring or overlook entirely: deregulation,” Washington bureau chief Gerald Seib writes. “While the Republican machine that emerged from the 2016 election may be sputtering on other fronts, it is proving to be a juggernaut on deregulation. And as a priority for the business community, deregulation ranks right up there with tax cuts and tax reform.”

Quotable
“Little has changed since the promise in 2009 that we bring finance to heel. The banks that were deemed ‘too big to fail’ are now even bigger.” — Former U.K. Prime Minister Gordon Brown in his new book, “My Life, Our Times,” which includes “a scathing attack on the British banking system,” according to the Financial Times.

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