HSBC announced a share buyback of up to $2bn, as Europe’s largest lender reported a 74 per cent increase in profits as the global economic outlook improved nearly two years after the start of the pandemic.
The UK-headquartered bank has benefited from a strong capital position and said it would release $700m of cash that had been set aside for bad loans that had not materialised, adding to the $700m it had already released this year.
Pre-tax profits for the third quarter were $5.4bn, compared to $3.1bn a year earlier, beating the $3.8bn average estimate predicted by analysts.
“While we retain a cautious outlook on the external risk environment, we believe that the lows of recent quarters are behind us,” said Noel Quinn, chief executive.
“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.”
The bank’s performance has been a marked improvement on 2020, when profits fell 45 per cent as banks were hit by ultra-low rates, a slowdown in trade and the fallout from global lockdowns.
HSBC announced an interim dividend in August of 7 cents per share worth about $1.4bn after the Bank of England removed restrictions on shareholder payouts, judging the sector to be resilient enough to withstand any further shocks from the pandemic.
The bank said its “pivot to Asia” was boosted in the third quarter by strong equity trading activity from its wealth management clients in the region, its main profit centre, and volatility in Hong Kong and Shanghai stock exchanges. Global revenue grew 1 per cent to $12bn compared to the same period last year.
The bank acquired insurer Axa’s Singapore business in August, which it called a crucial step in its plan to be a leading wealth manager in Asia.
HSBC merged its retail and wealth units last year as part of a global restructure to shift its focus to rising incomes in Asia and away from its struggling businesses in the US and parts of Europe. The combined business has $1.4tn of assets, more than half of which are in Asia.