HSBC, Europe’s largest lender, announced a share buyback program of up to $3 billion after surpassing expectations for pretax profit in the first half of the year. Despite a slight drop in pretax profit compared to the same period last year, HSBC’s profit of $21.56 billion exceeded the $20.5 billion average estimated by brokers. The bank’s revenue increased by 1.1% year-on-year to $37.3 billion, with growth attributed to higher consumer activity in wealth products and in equities and securities financing. Additionally, HSBC saw a 12% increase in wealth revenue to $4.3 billion, driven by growth in investment distribution, asset management, and life insurance.
HSBC’s outgoing CEO, Noel Quinn, emphasized the bank’s focus on diversifying revenues and maintaining a strong presence in key markets like Hong Kong and the U.K. Notably, HSBC attracted 345,000 new-to-bank customers in Hong Kong during the first half of the year and saw an 8% increase in international customers in the U.K. The bank approved a second interim dividend of $0.10 per share and announced the share buyback program, which is expected to be completed within three months. In total, HSBC has distributed over $34 billion to shareholders in the past 18 months.
The bank’s CET1 capital ratio improved to 15.0%, exceeding its medium-term target range of 14% to 14.5%. Despite a decrease in return on average tangible equity to 17.0% in the first half of the year, HSBC provided guidance for a “mid-teens return on average tangible equity in 2025.” Analysts welcomed this new outlook, indicating it is ahead of consensus estimates. However, some analysts expressed concerns about the bank’s future earnings momentum, particularly with expected falling rates in HSBC’s core geographies over the next year.
HSBC’s CEO expressed confidence in the bank’s future performance, highlighting the positive signs in the U.K. economy and pointing to encouraging signs for future economic growth. The bank’s ability to continue growing revenue from sources other than interest income was noted as a standout performance. Despite potential headwinds, including falling interest rates, HSBC remains focused on cost control and growth strategies. The bank aims to maintain strong performance and achieve a mid-teens return on average tangible equity in 2025, in line with its outlook for 2024.
In conclusion, HSBC’s strong revenue performance in the first half of the year, driven by higher consumer activity in wealth products and equities, has positioned the bank well for future growth. The share buyback program and dividend payments reflect HSBC’s commitment to returning value to shareholders. While challenges may lie ahead, including potential economic headwinds, HSBC remains confident in its ability to navigate these challenges and deliver solid financial results in the coming years. The bank’s strategic focus on revenue diversification and maintaining a strong presence in key markets will play a crucial role in driving continued success.
