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HSBC unveils £3bn share buyback as profits remain flat

Published 31/07/2024, 08:49
© Reuters.  HSBC unveils £3bn share buyback as profits remain flat
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Proactive Investors - HSBC Holdings PLC (LON:HSBA) has declared a second interim dividend and will launch a £3 billion share buyback as it reported a mostly flat performance in the first half of the year.

The dividend of $0.10 per share makes 20 cents for the first six months of 2024, flat on a year ago, with the share buyback expected to be complete within three months.

The Asia-focused bank revealed a first-half profit before tax of $21.6 billion that was down slightly on a year ago, despite a $0.2 billion net favourable revenue impact from certain "strategic transactions" and revenue rising 1% to $37.3 billion.

Profits were boosted by a $4.8 billion gain from the sale of banking operations in Canada, partly offset by a $1.2 billion impairment related to a similar planned Argentinian sale.

Operating expenses increased 5% due to higher technology spend and investment, as well as inflationary pressures and an increase in the bonus accrual.

Net interest margin decreased to 1.62% from 1.7% on a year ago, reflecting a rise in the funding cost of average interest-bearing liabilities.

On the outlook, the FTSE 100-listed lender said it will target a return on average tangible equity (RoTE) "in the mid-teens" for both 2024 and 2025, which compares to current consensus forecasts of 15.8% for this year and 12.5% for 2025.

Chief executive Noel Quinn, who announced his retirement earlier this month, called it "another strong profit performance" that was "further evidence that our strategy is working".

"Investment in Wealth is delivering higher, more diversified revenue and we continue to grow our core international and scale businesses, all of which helped us to provide $13.7bn of distributions in respect of the first half.

"We are confident that we have the right strategy and model to grow revenue, even in a lower interest rate environment, and are therefore providing new guidance of a mid-teens return on average tangible equity in 2025."

Quinn is to be replaced by currency chief finance officer and former markets co-chief Georges Elhedery at the start of September.

HSBC shares were up 2.6% in Hong Kong just before trading began in London on Wednesday.

Read more on Proactive Investors UK

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