HSBC Announces $3 Billion Buyback Program, Hints at More Returns Despite Q3 Profit Miss

HSBC Holdings Plc, the London-based banking giant, unveiled a fresh buyback program and hinted at the possibility of additional returns to investors, even after posting third-quarter profits that fell short of market expectations.

The bank stated that it would soon initiate a share buyback amounting to $3 billion, bringing the total stock repurchases for the year to $7 billion.

CEO Noel Quinn also suggested that more buybacks could be on the horizon.

Quinn stated, “We’ve got very strong capital generation at the moment. We’re in a good position to reward our shareholders for their patience and loyalty over the past few years.”

However, the bank reported a pre-tax profit of $7.7 billion for the third quarter, missing the estimated $8.1 billion projected by analysts tracked by the company. This discrepancy was attributed, in part to a $600 million charge related to the bank’s hedging strategy, expected to benefit the bank in subsequent quarters.

HSBC’s operating expenses increased by 2% compared to the same period the previous year, driven by a planned boost in performance pay for certain staff and higher technology spending.

The bank now anticipates a cost growth of about 4% for 2023, up from its earlier target of about 3%.

Despite these financials, the bank’s shares remained relatively unchanged in Hong Kong.

HSBC, which generates most of its income in Asia, noted a strong wealth performance, particularly in Hong Kong.

The bank recently agreed to acquire Citigroup Inc’s retail wealth management portfolio in mainland China, adding approximately $3.6 billion in assets and deposits from wealth customers across 11 major cities.

Although China’s economic growth has encountered challenges, HSBC expressed optimism about the Chinese property market’s prospects.

CEO Quinn emphasized that while the market had experienced a significant policy correction, prices have likely reached a low point, and gradual improvement is expected over the next year.

HSBC remains focused on delivering strong shareholder value, with the outlook for expected credit losses unchanged and a mid-teens growth target for its return on tangible equity.