HSBC surprises with 74% rise in Q3 profit, announces $2 billion buyback

By Anshuman Daga and Lawrence White

SINGAPORE/LONDON (Reuters) -HSBC Holdings reported a 74% rise in third quarter profit, beating market expectations, as the Asia-focussed bank released cash set aside for expected bad loans that have not materialised.

It also announced a share buyback of up to $2 billion, as it continues to return excess capital to shareholders in place of investing the cash in its businesses.

“While we retain a cautious outlook on the external risk environment, we believe that the lows of recent quarters are behind us,” Chief Executive Neil Quinn said in the results statement on Monday.

“This confidence, together with our strong capital position, enables us to announce a share buyback of up to $2bln, which we expect to commence shortly,” he said.

Quinn, who was confirmed in the role in 2020 just as the pandemic-induced economic crisis began, is betting on Asia to drive growth, by moving global executives there and ploughing billions into the lucrative wealth business.

The bank posted pretax profit of $5.4 billion for the quarter to September, versus $3.1 billion a year earlier and the $3.78 billion average estimate of 14 analysts compiled by HSBC.

HSBC released $700 million in cash it had put aside in case pandemic-related bad loans spiked, as opposed to the same time a year ago when it took an $800 million charge in expectation of such soured debts.

In reality economic conditions have improved while loans have performed better than expected, the bank said.

The results from the London-headquartered bank come as rivals such as Citigroup are riding a M&A boom, while fending off weakness in the lending business.

HSBC’s investment banking business however saw income fall compared to the same period a year ago as its global debt business in particular softened.

HSBC said its cost projections for 2022 had increased from $31 billion to $32 billion, due to the pressures of inflation and the timing of various acquisitions and disposals.

(Reporting by Anshuman Daga in Singapore and Lawrence White in London; Editing by Ana Nicolaci da Costa)

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