HSBC beats forecast and announces $3bn share buyback

HSBC’s new chief executive, Georges Elhedery, has pledged to winnow out senior ranks of the bank “at pace” but declined to put any number on cost savings as he reported better than expected results for the September quarter.
Elhedery said there would be “a reduction in senior roles” as a result of what he called “a deduplication of governance”.
He also emphatically ruled out any break-up of the group despite fresh calls from some shareholders that it should prepare for an eventual split.
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“This is not a precursor to any split,” he said of the sweeping reorganisation of the bank announced this month. “Our customers do cherish our capability of serving them across their global needs.”
The bank lifted pre-tax profits by 11 per cent in the September quarter, significantly beating downbeat expectations, and promised a further $4.8 billion in shareholder distributions.
Analysts had expected a small decline in pre-tax profits from $7.7 billion last time, but the Asia-focused bank posted a figure of $8.5 billion.
HSBC shares rose 4 per cent, or 30p, to 722p on the London stock exchange.
Elhedery said the results were boosted by strong performances in wealth, personal banking and parts of the investment banking division and “shows our strategy is working”.
The profits boost came in spite of a $1.6 billion fall in net interest income and a narrowing of the closely watched net interest margin by 0.24 percentage points to 1.46 per cent.
Expected credit losses — an estimate of future defaults by borrowers — were $1 billion, down by $100 million compared to the third quarter of 2023.
Elhedery refused to be drawn on his hopes and fears for Labour’s budget tomorrow, but added: “We’re very optimistic about the UK.”
The government’s emphasis on growth and investment was “very encouraging,” he added.
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He has previously announced plans to reduce the operating divisions from five to two and to reduce numbers on the main executive committee from 18 to 12 to make the bank more nimble and responsive to customers’ needs.
“We’ve started already putting the new organisation in place,” he said. The payback period in terms of cost savings was “a matter of months, not years”. More details will be given at the full-year results in February.
The bank announced a new share buyback of up to $3 billion as well as a third-quarter dividend of 10 cents a share.
HSBC is one of the biggest lenders in the world, with its strongest presence in Hong Kong and 214,000 employees worldwide. It serves 39 million customers in 62 countries and is a major presence in the UK after taking over Midland Bank in 1992. It is the London market’s third biggest company after AstraZeneca and Shell and weighs in at £124 billion.
Other banks have reported strong Q3 figures, with Barclays lifting pre-tax profits by 18 per cent to £2.2 billion and NatWest posting a 26 per cent increase to almost £1.7 billion.
UK banks have been lobbying against any increase in either the bank profits surcharge or the balance sheet levy in tomorrow’s budget.
On the US election, Elhedery said it was “a matter for the US electors” and HSBC would support its customers “whatever may come”. Donald Trump has signalled major increases in tariffs if he wins, which could hurt global trade, on which HSBC depends.