HSBC Holdings pledged a $3 billion share buyback to boost its stock, following stable first-half profits and improved real estate losses.
Europe’s largest bank aims for a mid-teens return on tangible equity by 2025, aligning with its 2024 estimate.
Jefferies analyst Joe Dickerson stated that the earnings exceeded expectations, and thus, the new return target should boost investor confidence.
HSBC, set to welcome CEO Georges Elhedery in September, is progressing in growing fee-based income to counteract declining lending revenue, with expected rate cuts.
“We are confident that we have the right strategy and model to grow revenue, even in a lower interest rate environment,” Quinn said in a statement.
The Asia-focused bank will pay a 10-cent interim dividend, following last quarter’s 31-cent payment.
The $3 billion buyback, following the $5 billion buyback, brings total shareholder returns to $36 billion in dividends and $18 billion in buybacks during Quinn’s tenure.
HSBC’s Hong Kong-listed shares jumped more than 3% following the earnings announcement.
HSBC reported a 0.4% drop in pretax profit to $21.6 billion, surpassing the $20.5 billion forecast.
Wealth revenue hit $4.3 billion for January-June, up 12% from 2023, thanks to higher investment income, private banking, and asset management growth.
HSBC’s Mid-Year Update: Growth, Market Resilience, and Leadership Changes
The lender emphasized its focus on London and Hong Kong, noting an 8% increase in international customers to 2.7 million, including 345,000 new accounts in Hong Kong.
It also showed relief from China’s slowing economy and property sector issues, following a $3 billion writedown last year.
Revenue at HSBC’s Global Banking and Markets unit rose 5%, driven by a boost in equities, aligning with rivals’ trends.
Overall, HSBC expects credit loss to drop to 30-40 basis points this year, down from about 40 basis points last year.
It also increased its net interest income forecast to roughly $43 billion from at least $41 billion.
Operating expenses rose about 5% to $16.3 billion in the first half, driven by tech spending, inflation, and bonus timing changes.
The bank also appointed Jonathan Bingham as acting group chief financial officer, beginning September 2.
Bingham, with 20 years at KPMG and now HSBC’s global financial controller, will keep his role while HSBC seeks a permanent CFO.