HSBC Tops First Half Estimates, Boosts Share Buyback Program by $2 Billion

Stuart Gulliver HSBC CEO
Stuart Gulliver HSBC CEO
Author

01 August, 2017

Revenue for the first half was marked at $26.2 billion, the bank said, down 11% from previous year " primarily due to currency translation differences, the absence of fair value movements on our own debt and revenue from the operations in Brazil that we sold", HSBC said.

He made the remarks on a conference call after the bank reported an increase in first half profit and announced $2bn share buyback programme. It completed a previously announced $1bn buyback in April.

Europe's biggest bank reported a pre-tax profit of $10.2bn (£7.8bn) for the first six months, up by about $500m.

The latest share buyback lifts the total buybacks by the bank the this year to $5.5 billion.

Mark Tucker, the chief executive of the Asian insurer AIA Group, was named as Mr. Flint's replacement in March. The chief executive officer has spent most of his tenure shrinking and imposing central control over HSBC's vast global network, exiting nearly 100 businesses and 18 countries while enduring several costly misconduct scandals.

"We see this as a solid set of results, but would expect a somewhat muted share price reaction: the strong recent performance of the shares suggests to us that today's solid print is likely already reflected in the price", Goldman said.

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The share buybacks and sustainable dividends show that HSBC has advanced further in its turnaround in comparison to other rivals based in Britain including Standard Chartered and Barclays, which during restructuring suspended payouts. "The return of capital comes from the fact that the business is very accretive, very profitable. the dividend is 51 cents for the foreseeable future", said finance director Iain Mackay.

HSBC has implemented wide-ranging structural changes since the 2008 financial crisis focused on streamlining the business and bringing down operating costs. New capital regulations have also depressed shareholder payouts as banks stockpile cash to swell their loss-absorbing buffers.

"We have done this while strengthening one of the most resilient capital ratios in the industry".

In the first half the bank shaved another $2.2 billion off costs.

"I can not tell you whether we'll do a further buyback this year, but we are using buybacks as a regular part of the toolkit to manage returns to shareholders", Gulliver said in the conference call. Interested investors should note that this latest move takes the amount of buy-backs pledged since the second half of 2016 to $5.5bn.

HSBC generates more than half of its profit in Asia and on Monday it said that pre-tax profit in the region had risen 7 per cent during the period to $7.6bn, particularly spurred by revenue from its wealth management and insurance businesses in Hong Kong.


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