HSBC surprises with 74pc rise in Q3 profit, announces US$2b buyback

Finance | 25 Oct 2021 12:53 pm

HSBC Holdings (HSBA.L) reported a 74 percent rise in third quarter profit, beating market expectations, as the Asia-focussed bank released cash set aside for expected bad loans that have not materialized.

It also announced a share buyback of up to US$2 billion, as it continues to return excess capital to shareholders in place of investing the cash in its businesses.

"While we retain a cautious outlook on the external risk environment, we believe that the lows of recent quarters are behind us," Chief Executive Neil Quinn said in the results statement on Monday.

"This confidence, together with our strong capital position, enables us to announce a share buyback of up to US$2 billion, which we expect to commence shortly," he said.

Quinn, who was confirmed in the role in 2020 just as the pandemic-induced economic crisis began, is betting on Asia to drive growth, by moving global executives there and plowing billions into the lucrative wealth business.

The bank posted pretax profit of US$5.4 billion for the quarter to September, versus US$3.1 billion a year earlier and the US$3.78 billion average estimate of 14 analysts compiled by HSBC.

HSBC released US$700 million in cash it had put aside in case pandemic-related bad loans spiked, as opposed to the same time a year ago when it took a US$800 million charge in expectation of such soured debts.

In reality economic conditions have improved while loans have performed better than expected, the bank said.

The results from the London-headquartered bank come as rivals such as Citigroup (C.N) are riding a M&A boom, while fending off weakness in the lending business.

HSBC's investment banking business however saw income fall compared to the same period a year ago as its global debt business in particular softened.

HSBC said its cost projections for 2022 had increased from US$31 billion to US$32 billion, due to the pressures of inflation and the timing of various acquisitions and disposals.

HSBC shares in Hong Kong traded 0.5 percent higher before the lunch break on Monday. -- Reuters

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