Markets

HSBC share price rallies as lender unveils share buyback programme

HSBC share price rallies as lender unveils share buyback programme

The banking giant said pre-tax profit rose 5% to 10.2 billion U.S. dollars (£7.8 billion) in the first six months of the year, ahead of expectations, as the lender hailed a strong performance across its main divisions.

The company also announced it would be buying back $2 billion in shares in the last half of the year.

Revenues fell 11 per cent to $26.2 billion in the first-half, however. It did not benefit this time from a favourable change in the value of its own debt. The bank said after stripping out the bank's sold Brazil unit and other one-offs, revenue was up 3%, mainly from higher revenue on customer deposits.

Outgoing chairman Douglas Flint and chief executive Stuart Gulliver have been attempting to reinvigorate the bank since the financial crisis, after which it faced a series of misconduct issues.

The new buybacks, to be completed by December, will add to the $3.5 billion of repurchases since previous year that have helped push the lender's stock up more than 50 percent in the past 12 months.

The announcement takes the total of HSBC share buybacks since August 2016 to $5.5bn.

For example, the Bank of England has estimated a single basis-point increase that might result from splitting the clearing of interest-rate swaps could cost firms across the euro zone €22 billion a year, according to a June 27 report.

Reported pre-tax profit for the six months to June rose 5% to $10.2bn compared with $9.7bn for the same period in 2016.

The latest share buyback lifts the total buybacks by the bank the this year to $5.5 billion. HSBC said it has spent about US$500m so far on that restructuring, including US$176m in the first half of this year. "The return of capital comes from the fact that the business is very accretive, very profitable. the dividend is 51 cents for the foreseeable future", said finance director Iain Mackay. At the 2015 strategy day, Mr. Gulliver laid out an aim to get revenue growth in its worldwide network above GDP, and said he tracks the estimated figure every two weeks.

Gulliver said he could be at HSBC as late as December 2018 if an external candidate is appointed by incoming chairman Tucker.

Focus on ChinaThe bank announced two years ago it would hire 4,000 staff and lend more in China's southern Pearl River Delta region, a plan that has since encountered some setbacks as China's growth slowed, showing both the risks and opportunities.


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