HSBC shares shoot up on announcing up to $2bn share buyback


Shares in blue chip bank HSBC shot up more than two per cent this morning on the Hong Kong Stock Exchange, as it announced a share buyback programme which will return up to $2bn (£1.52bn) to shareholders.

The announcement, which brings the total stock it has pledged to buy back in the past year to $5.5bn, came in a positive set of interim results from the banking group, City AM reports.

“We have had an excellent first half of 2017, reflecting the changes we have made since our Investor Update in 2015 and the strength of our competitive position,” said chief executive Stuart Gulliver.

“Our three main global businesses performed well, increasing profit before tax and growing market share in many of the products that are central to our strategy. We remain on track to complete the majority of our strategic actions by the end of the year.”

The numbers

The bank’s adjusted pre-tax profits hit $12bn, up 12 per cent on the same period last year, while earnings per share of 35¢ beat analysts’ consensus.

Pre-tax profit was up five per cent at $10.24bn and also exceeded analysts’ $9.5bn average estimate.

HSBC said it had seen a seven per cent increase in revenue from transaction banking products, although overall revenue of $26.2bn was 11 per cent lower “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”.

Risk-weighted assets were reduced by $29bn over the six-month period, exceeding HSBC’s target and bringing the total amount of risk-weighted assets extracted since the start of 2015 to $296bn.

Why it’s interesting

HSBC is facing a shake-up in its top team, as long-serving chairman Douglas Flint prepares to give up his role to former AIA insurance chief executive Mark Tucker.

Tucker will also be tasked with finding a new chief executive for the banking group, after Gulliver announced he would quit two years ago.

The bank announced a new phase of restructuring in 2015, promising to rein in costs and cut back on risk-weighted assets in slow-growth markets.