Receive free HSBC Holdings PLC updates
We’ll send you a myFT Daily Digest email rounding up the latest HSBC Holdings PLC news every morning.
HSBC has announced its second $2bn share buyback of the year after reporting better than expected profits for the three months to June 30, boosted by rising interest rates.
The UK-based lender on Tuesday said it would pay a dividend of 10 cents a share on top of the 10 cents it paid for the first quarter, as it reported pre-tax profits of $8.8bn for the second quarter, beating analysts’ expectations of $8bn.
Chief executive Noel Quinn said it was a “strong first half performance” with “good broad-based profit generation around the world, higher revenue in our global businesses driven by strong net interest income, and continued tight cost control”.
Net interest margin — a crucial measure of lending profitability — rose to 1.72 per cent in the second quarter, up from 1.69 per cent in the first three months of the year and beating expectations of 1.66 per cent.
The figures are the latest sign of how central banks’ swift interest rate rises are boosting the sector’s performance, with banks generating profits from the difference between the interest they receive from making loans and the rate they pay out to depositors.
Rival Standard Chartered last week reported better than expected results. HSBC is particularly sensitive to interest rates as one of the world’s largest deposit-taking institutions, with total assets of $3tn.
HSBC announced a $2bn share buyback when it reported its first-quarter earnings in May, as it sought to shore up investor support in the face of intensifying criticism from its biggest shareholder, Chinese insurer Ping An. The bank has completed that buyback and expects to start the next one “shortly” and complete it within three months, it said on Tuesday.
The quarterly earnings report was HSBC’s first since shareholders rejected a proposal, backed by Ping An, to split off its Asian operations.
As its largest shareholder, Ping An has been pressing HSBC to split, arguing its model straddling east and west is not sustainable. The Chinese group has been less vocal on the issue since other shareholders rejected the proposal.
HSBC said it expected $900mn in credit losses, including charges related to commercial real estate in China and to its UK commercial banking operations.
Read the full article here
