HSBC smashes expectations and launches share buyback programme

HSBC smashed expectations for profit for the third quarter of the year driven by the release of reserves set aside to cope with an expected wave of pandemic-induced defaults.

The bank registered a pre-tax profit of $5.4bn in the quarter to September, up from $3.1bn a year ago.

Analysts had expected profit to come in at $3.78bn.

The bank registered a pre-tax profit of $5.4bn in the quarter to September, up from $3.1bn a year ago.

Analysts had expected profit to come in at $3.78bn.

An improving economic backdrop allowed the Asia focused bank to release $400m of reserves set aside during the height of the Covid-19 crisis, compared to a $800m reserve charge last year.

Strong confidence in the worst effects of the pandemic being over prompted HSBC to launch a $2bn share buyback programme.

HSBC has a strong presence in Asia and often relies on the region to generate profits.

Its Asia business contributed $3.3bn to the total profit take, while its UK business reported $1.5bn in profits.

Noel Quinn, chief executive of HSBC, said: “We had a good third-quarter performance, with strong growth in profits supported by additional credit provision releases. Our strategy remains on track, with good delivery in all areas.”

“This was reflected in more consistent top-line growth, robust lending pipelines across our businesses, and rising trade and mortgage balances.”

“While we retain a cautious outlook on the external risk environment, we believe that the lows of recent quarters are behind us. This confidence, together with our strong capital position, enables us to announce a share buyback of up to $2bn, which we expect to commence shortly.”

HSBC’s common equity tier one ratio, a measure of a bank’s balance sheet strength, came in at 15.9 per cent.