- Second $2 billion buyback this year
- Upgraded guidance for return on tangible equity
- Shares up 2.6% on the results
The UK’s largest bank by market value HSBC (HSBA) posted better-than-expected first-half earnings helped by two significant one-off factors and rolled out a new $2 billion share buyback programme, sending its shares towards the top of the FTSE 100 leader board with a 2.6% gain to 662p.
The bank also raised its target for return on tangible equity for this year and next year from above 12% to the mid-teens ‘based on the current path implied by the market for global policy rates’.
HOW MUCH HAS HSBC'S REVENUE GROWN?
Revenue for the first six months of 2023 increased by $12.3 billion or 50% from $24.6 billion to $36.9 billion due to the inclusion once again of the bank’s French retail operations – which were previously excluded from the accounts as they were being held for sale – and the inclusion of SVB UK which was acquired in March.
The bank maintained the underlying business was helped by higher net interest income across its global network thanks to interest rate rises and reported a net interest margin for the group of 1.7%, up 0.46% on the same period last year, although it didn’t break out the figure by regions so there was little way of telling how well – or how badly – the UK market had performed.
Charges for expected credit losses were $1.34 billion or roughly $300 million higher than the first half of 2022, and while the bank flagged an increase in provisions for Chinese commercial real estate and Russia risks it glossed over the fact it hiked UK provisions to $418 million from $73 million accounting for the bulk of the increase at group level.
INCREASING SHAREHOLDER RETURNS
There wasn’t much attention on the underlying results, however, as the focus was mostly on the new $2 billion share buyback starting this week, hard on the heels of the previous $2 billion buyback which only completed last month, along with a hint there could be more to come.
There was also the promise of a special dividend of $0.21 per share ‘as a priority use’ of the proceeds from the sale of the Canadian business planned for the first half of next year.
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