HSBC interim profit seen at US$21b, buyback on cards

HSBC (0005) is expected to post an interim pre-tax profit between US$20.8 billion (HK$162.2 billion) and US$21.2 billion and announce a new US$2 billion share buyback tomorrow.

The second interim dividend is expected to be kept steady at 10 US cents per share from the first quarter, according to forecasts from investment banks.

The Europe's largest bank has beat market expectations with a pre-tax profit of US$12.9 billion in the first quarter this year and resumed paying quarterly dividends for the first time since 2019.

And its Hong Kong-listed shares saw a 41 percent rise so far this year to HK$64.8, the highest since June 2018. That compared with a 0.7 percent gain in the city's benchmark the Hang Seng Index.

JP Morgan expects the Asian-focused lender to record a pre-tax profit of US$20.97 billion during the first six months of this year.

For the second quarter alone, the US investment bank noted that HSBC may see a 74 percent year-on-year increase in pre-tax profit to US$8.1 billion, although it would be a 37 percent decline from the previous quarter.

BofA Securities expected HSBC to post an interim pre-tax profit of US$20.8 billion amid rising interest rates despite the loan business being pressured.

Both JP Morgan and BofA expected HSBC to reveal an additional share buyback of up to US$2 billion this week, compared with a median forecast of US$1.3 billion. The London-headquartered lender had announced a US$2 billion share repurchase plan when unveiling first-quarter financial results.

Kenny Wen Kit, head of investment strategy at KGI Asia, said that although HSBC is still attractive based on overall performances after the rise in shares, investors may consider buying shares when they retreat to below HK$58.

Meanwhile, rival lender Standard Chartered (2888) lifted its interim dividend by 50 percent after posting a 20 percent growth in pre-tax profit on Friday, sending its shares up by 3.9 percent.

StanChart, which earns most of its revenue in Asia, said statutory pretax profit for the first six months of this year reached US$3.32 billion.

That compared with US$2.77 billion a year earlier and the US$3.18 billion average of 16 analyst estimates compiled by the bank.

The bank also upgraded its guidance for income growth in 2023 to a 12-14 percent range from 10 percent previously.