HSBC announces repurchase of $ 2 billion in shares as profits rise

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HSBC Holdings PLC announced a $ 2 billion share buyback and an increase in third-quarter net income as the lender faced growing geopolitical and real estate risks in China.

The London-based bank earned $ 3.54 billion in the three months to the end of September, up from $ 1.36 billion in the same period last year. His profits were boosted by the release of the money he set aside a year ago, when banks were preparing their loan portfolios for widespread defaults linked to the pandemic.

Most of these losses did not materialize. As the global economy recovers, banks have freed up past provisions while setting less aside for outstanding direct lender loans, thus increasing their profits.

Analysts had expected HSBC to report a profit of $ 2.22 billion. Revenue was roughly flat at $ 12 billion.

HSBC shares rose 1% on news of better-than-expected earnings and buybacks. CFO Ewen Stevenson said in an interview that the bank may announce additional buybacks next year.

“While we maintain a cautious view of the external risk environment, we believe the lows of recent quarters are behind us,” HSBC chief executive Noel Quinn said in a statement. to announce a share buyback of up to $ 2 billion that will begin soon, he added.

HSBC is focusing more on lucrative Asian markets and agreed to sell its retail banking business in France and the United States earlier this year. It achieved pre-tax profit of $ 1.77 billion in Hong Kong, down 6.5% from the third quarter of 2020, mainly due to lower net interest income in the recent period. .

Mainland China’s pre-tax profit increased 45% year-over-year to $ 749 million in the quarter, while UK bank HSBC’s more than doubled to $ 1.49 billion of dollars.

HSBC said it was closely monitoring the Chinese real estate market, where some developers, including real estate giant China Evergrande Group, are struggling to keep up with their debt payments. HSBC said as of September 30, it had no direct credit exposure to real estate companies considered riskiest by the Chinese government.

“We’re not complacent about it, but we’re also not overly concerned,” Stevenson said. He said the Hong Kong real estate market, where HSBC is a major lender, so far appears insulated from stress on the mainland.

HSBC’s tilt to Asia has been hampered by geopolitical tensions between China and Western countries. Some US and UK politicians have criticized the bank for failing to publicly criticize China’s imposition of a new national security law on Hong Kong. Mr Quinn told British politicians in January that it was not his job as a banker to oppose Chinese policies. On Monday, the bank warned that diplomatic tensions between China and the West could create “regulatory, reputational and market risks.”

The bank is considering three or four acquisitions to strengthen its wealth management and insurance operations in Asia, which could total around $ 2 billion if deals are struck next year, Quinn told reporters. In August, HSBC agreed to pay $ 575 million for a Singapore-based life insurance unit of French Axa SA.

The bank last month paid an interim dividend of $ 0.07 per share for the first half of 2021. HSBC on Monday said it would not pay quarterly dividends this year, but will consider whether to do so by the time it publishes its full year. results in February 2022.

This story was posted from an agency feed with no text editing

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