HSBC declares $3bn share buyback after profits more than double

HSBC has announced a further $3billion share buyback as it revealed profits more than doubled in the third quarter.

The banking giant said pre-tax profits jumped by $4.5billion to $7.5billion in the three months ending September, although this was still below analyst expectations of $8.1billion.

Growth was driven by central banks hiking interest rates amidst elevated inflationary pressures, which boosted HSBC’s net interest income by 16 per cent to $9.2billion.

Turnover and earnings were further uplifted by ‘broadly stable’ loan loss charges and the reversal of a $2.1billion impairment related to the stalled disposal of its retail banking business in France.

HSBC expects to reinstate the impairment charge in the current quarter when it reclassifies the French operations as up for sale.

The FTSE 100 group has already incurred charges of around $800million in 2023 from the severe downturn affecting China’s commercial property industry.

Nonetheless, its Asia-Pacific subsidiary – the largest regional division – saw pre-tax profits climb by 64 per cent to $15billion over the first nine months of the year.

In the UK, the equivalent figure nearly doubled to $6.6billion thanks partly to a provisional gain from the acquisition of Silicon Valley Bank’s British operations.

‘We have had three consecutive quarters of strong financial performance,’ remarked Noel Quinn, HSBC’s chief executive.

Following the impressive result, the firm has declared an additional share repurchase scheme totalling $3billion, taking its total buybacks this year to $7billion.

It had faced pressure from its largest shareholder – Chinese insurer Ping An – to hand out higher shareholder returns, having cancelled them during the early stages of the Covid-19 pandemic.

The Shenzhen-based conglomerate also wanted to spin off the group’s Asian arm and make it pursue a more aggressive cost-reduction agenda, but investors voted against the proposals at HSBC’s annual general meeting in May.

As part of its cost-cutting drive, HSBC intends to move out of its global headquarters in Canary Wharf to much smaller offices in the City of London by 2026.

The move also reflects the Covid-induced trend towards hybrid working. 

Many of the bank’s UK staff had been allowed to work from home full-time until September after HSBC ordered all 18,500 of them to come into the office for at least three days a week. 

HSBC’s results come at the end of a mixed reporting season for Britain’s banking sector, with NatWest and Lloyds both reporting a rise in third-quarter profits, but Barclays and Standard Chartered posting drops.

Richard Hunter, head of markets at Interactive Investor, commented: ‘HSBC has brought down the curtain on a largely forgettable banks’ reporting season in largely positive fashion, still reaping the benefits of size but missing estimates on a couple of metrics.’

HSBC shares rose by 0.7 per cent to 605.1p in early trading on Monday, meaning they have increased by around 36 per cent over the past 12 months.