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HSBC unveils another £2.3bn buyback in CEO Quinn’s last results

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HSBC has ditched a series of European operations.
HSBC has ditched a series of European operations.

HSBC announced yet another share buyback scheme and upped its guidance for the remainder of the year after beating expectations in the second quarter.

Pre-tax profit increase to $8.9bn in the three months to June, comfortably higher than the $7.8bn expected by analysts and slightly ahead of last year.

The increase in profit was largely due to lower expected credit loss, which decreased by $600m. There were lower charges for commercial real estate in China and a reduction for HSBC’s UK division too.

This offset slightly lower revenue and higher operating costs resulting from the roll-out of new technology and the impact of inflation due to higher.

On the back of its results, HSBC approved a second interim dividend of 10 cents per share and announced another $3bn (£2.34bn) share buyback, following on from a similar programme in the first quarter.

This is the last set of results for current boss Noel Quinn, who will hand over to finance chief Georges Elhedery on 2 September.

“I have always been immensely proud of the heritage of this bank and the strategic role it plays in the world,” Quinn said.

Banks all over the world, including HSBC, have been lifted by the increase in global interest rates over the past few years, but tight monetary policy will be less of a tailwind in the months ahead.

HSBC’s net interest margin (NIM) – a measure of how profitable a bank’s lending is – decreased by eight basis points to 1.62 per cent. This reflected a rise in the funding cost of average interest-bearing liabilities.

Nevertheless, the bank expects net interest income of around $43bn in 2024, up from its previous guidance of at least $41bn in the first quarter. HSBC is also now targeting a return on tangible equity in the the mid-teens for both 2024 and 2025.

“We are confident that we have the right strategy and model to grow revenue, even in a lower interest rate environment, and are therefore providing new guidance of a mid-teens return on average tangible equity in 2025,” Quinn said.