HSBC,BNP, Novartis, United Healthcare, Royal Caribbean, and UPS Report Q3 Results and G – 255 Trading Indicators for October 28, 2025
HSBC (HSBC A3/A- attractive long credit/equity) reported 3Q earnings.
Revenue rose 5% YoY while operating earnings fell -14% YoY owing to Madoff litigation.
HSBC is retaining capital and
3Q Deposits rose 1% QoQ and 4% YoY.
3Q Asset quality is declining slightly QoQ and flat YoY.
3Q Client assets rose +4% in the quarter and 11% YoY.
3Q Loan growth rose 1% QoQ and 2% YoY.
3Q Net interest income rose 1.8% QoQ and 3.6% YoY
3Q Sales and trading was flat QoQ and rose +6% YoY
HSBC maintained its full year outlook to ROTE of "mid – teens."
Financial Position: Tier 1 capital is 14.5 % vs 14.6 % at June 30 and 15.3% @ September 30, 2024. HSBC has well over $100 bill of net cash and has returned over $20 billion to shareholders in the past 12 months. That represents 78% of HSBC's operating earnings. Company continues to grow is trading asset book slowly and credit quality was flat QoQ but lower YoY.
Credit Trading Indicator: The HSBC secondary trading USD curve has 61 liquid bonds (floating and fixed rate bank notes and Senior Holdco and Subordinated bonds and Perp) totaling $90.8 billion with 1 undervalued trade indicator.
Recent new USD supply: 9/2/25 HSBC 5.741 09/10/36 +83/3Y trades -14p to NIP
Equity Trading Indicator: Lloyds (LLOY LN) equity is a long trade indicator at its current price.
BNP (BNP, Baa1/A- attractive short credit/long equity) reported 3Q quarter earnings
Revenue rose 5.3% YoY while operating income rose 2.1% YoY
BNP is retaining capital YoY
3Q Deposits rose by 1% QoQ and 4.5% YoY.
3Q Asset quality was declining QoQ and improving YoY.
3Q Client assets rose 13% YoY owing to the AXA acquisition.
3Q Loans fell by -.2% QoQ and rose by 1% YoY.
3Q Commercial and Personal Banking Income rose +3% YoY
3Q Corporate and institutional banking income fell -.4% YoY
Management reaffirmed its 2025 net income target of over €12.2 billion
Financial Position: Tier 1 capital is 12.5% vs 12.5 % at June 30 and 12.5% @ September 30, 2024
BNP paid an interim dividend in the quarter of €2.8 billion which was financed with its balance sheet. BNP doesn't initially provide a straightforward net interest income reading, which is a bit unnerving what asset quality is falling. Loan book is shrinking. BNP balance sheet is now re-levering.
Credit Trading Indicator: The BNP secondary USD trading curve has 37 liquid bonds (fixed and floating rate bank notes, Sr. Holdco and subordinated bonds and Perp) totaling $61.6 billion with 26 overvalued trade indicators and 10 short trade indicators.
Recent new USD supply: June 23, 2025, BNP 7.45 PERP +313/10Y currently trading -33bp to NIP
Equity Trading Indicator: BNP equity is attractive long trade @ its current price
Novartis (NOVN VX, Aa3/AA- attractive short credit/long equity) 3Q ended September 30
Novartis reported operating revenue growth of 8% YoY in their third quarter. Operating income rose
24% YoY
3Q Operating Metrics
Company's top 7 therapies rose– 35% YoY
Immunology revenue rose 5% YoY
Neuroscience revenue rose 31% YoY
Oncology revenue rose 18% YoY
Operating Cashflow rose +5% YoY to $6.5 billion
Free Cashflow rose +4% YoY to $6.2 billion
Full-year 2025 guidance reaffirmed Sales expected to grow high single-digit Core operating income expected to grow low-teens
Financial Position: Novartis has returned $13.1 billion to shareholders in 2025 while de-levering its balance sheet materially (-$3 billion in net debt) during 3Q 2025. Total debt on the NOVN VX balance sheet is declining YoY.
Credit Trading Model Indicator: There are currently 13 secondary USD Novartis bonds in circulation totaling $15 billion. The systematic trading model has 1 long trading indicator, that being the shortest dated NOVNVX bond in the US capital structure.
Recent Novartis USD supply: Company last issued USD debt in June 2024.
Equity Trading Model Indicator: NOVN VX equity is a long indicator below CHF 98/shr.
United Healthcare (UNH A2/A+ attractive short credit/equity) reports 3Q results
United Healthcare reported 3Q 2025 revenue growth of 12% YoY and operating earnings that declined -50% YoY.
3Q Operating Metrics
Commercial customer adds -40k QoQ, + 200k YoY
Medicare + Medicaid adds +40k QoQ, + 594k YoY
Optimum Health adds -2k QoQ, -8k YoY
9mos Operating cashflow fell -15% YoY to $18.6 billion.
9mos Free cashflow rose from $2.8 billion to $13.5 billion.
Company raised 2025 guidance for revenue, cashflow and earnings.
Financial Position: UNH's balance sheet leverage grown 8 of the past 9 quarters from $33 billion to $49 billion. Company has been using balance sheet to return capital to shareholders for several years. That said the company has $53 billion of marketable securities on balance sheet. However, the number has grown only by $4 billion over the past 9 quarters.
Credit Trading Model Indicator: There are currently 56 liquid secondary USD UNH bonds totalling $64 billion. in market capital. 5 trading indicators are overvalued and 37 carry short trade indicators.
Recent new UNH supply: UNH 5.3 06/15/354.95 11/15/35 issued June 17, 2025, +92/10Y and currently trades -25 bp to NIP.
Equity Indicator: UNU equity is a shot trade indicator at above $420/shr.
Royal Caribbean (RCL, Baa3/BBB- attractive short credit / long equity) 3Q ended September 30
Royal Caribbean reported operating revenue growth of 5% YoY in their third quarter. Operating income rose
4% YoY
3Q Operating Metrics
Passengers Carried rose 6.2% YoY.
Passenger Cruise days rose 3.8% YoY.
Available Passenger Cruise days rose 2.8% YoY.
Occupancy rose +1.1% YoY to 112.1%.
9mos operating cash flow rose by 27% to $3.5 bill.
9mos free cash flow rose 30% to $1.3 billion
Company did not raise 4Q revenue, operating earnings guidance primarily due to weather conditions. spinoff.
Financial Position: In the quarter, net debt rose by +1.5billion QoQ and is now flat since 12/31/24. Company has returned $1.3 billion to shareholders via share repurchase and dividends and has only been paying a common dividend for the past 4 quarters.
Credit Trading Model Indicator: There are currently 20 Royal Caribbean secondary USD bonds in circulation totaling $22.2 billion of market capital. 6 have short trade indicators.
Recent new supply: September 22 RCL 5 â 01/15/36 +125/UST 5Y currently trades -17bp to NIP.
Equity Trading Model Indicator: RCL equity is a long trade indicator below $300/shr
United Parcel Service (UPS, A2/A attractive short credit/ equity) reports 3Q results
UPS 3Q 2025 revenue declined – 3.7% YoY and operating earnings fell -9% YoY.
3Q Operating Metrics
• US Domestic Package unit volume fell -12% YoY – prices rose +9.8% YoY
• Internation Package unit volume rose 6% YoY – prices rose +9.1% YoY
• 9 mos Operating cash flow fell 32% YoY to $5.1 billion
• 9 mos Free cash flow fell -34% YoY to $3.1 billion.
• Management guided on 4Q revenue Approximately $24.0 billion Non-GAAP Adjusted Operating Margin: 11.0% to 11.5% which was "Ahead of expectations."
Financial Position: UPS has returned just over $5 bil to shareholders in the first 9 months of 2025 and borrowed $3 billion of the $5 billion.
Credit Trading Model Indicator: There are 21 UPS secondary USD bonds in circulation ($19.4 billion of overall market capital), and 3 bonds carry overvalued systematic credit trading indicators. 9 bonds have short trade indicators.
Recent new supply: May 12, 2025, UPS 5 ¼ 05/14/35 +82/10Y now trades -22bp to NIP.
Equity Indicator: UPS equity is a short trade indicator above $105 per share.
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