HSBC plans another $3 billion stock buyback as CEO Noel Quinn prepares to leave

By Louis Goss

HSBC Holdings on Wednesday outlined plans to buy back another $3 billion worth of its stock from shareholders as it beat expectations on a strong performance from its wealth division, driven by a bumper result in Asia.

In its final set of results to be published under Chief Executive Noel Quinn, HSBC beat expectations in posting post-tax profits worth $6.8 billion in the second quarter of 2024, compared with the $6.2 billion expected by 15 analysts polled by the company itself.

HSBC (UK:HSBA) shares, listed on the London Stock Exchange, increased 4% on Wednesday, and have gained 12% this year.

The London-headquartered lender, which makes the bulk of its money in Asia, announced another $3 billion in stock buybacks, on top of the $3 billion plan it announced in the first quarter - as it also pledged to pay out a dividend worth $1.8 billion.

The bank was boosted by an 11% increase in pre-tax profits from its U.K. division in the first half of the year - to $3.7 billion - as it boosted its shares of Britain's mortgage market and drew in 2.7 million new international customers.

In its main market Hong Kong, HSBC increased its pre-tax profits by 1% to $6.1 billion in the first half of the year, as it drew in 345,000 new customers into the Asia division while profiting on a recent rally in the Hang Seng index.

This contributed to a 12% increase in revenue from HSBC's wealth division, as the financier capitalized on the growing affluence of people in Asia's top economies by drawing in $32.4 billion worth of new assets into the segment.

The extra inflows also helped HSBC achieve pre-tax profits of more than $1 billion in mainland China, India and Singapore. Its Asian wealth business increased its second-quarter revenue by 26% year-over-year.

In a call with investors, HSBC CFO Georges Elhedery, who is set to succeed current CEO Quinn in September, said the bank felt "encouraged" by the "activity" and "vigorousness" currently being seen in Asian stock markets and Hong Kong Stock Exchange.

The lender said it now expects its net interest income will be higher than previously expected, at $43 billion for 2024, compared to its previous $41 billion estimate, on the back of its strong performance in the first half.

HSBC said it now plans to "double down" on international connectivity in the face of calls from its top shareholder, Ping An, for the bank to split between its U.K. and Hong Kong divisions.

The bank said it had also reduced its exposure to China's troubled commercial real estate market, to $9.4 billion, as it noted there are few signs the sector will make a "sustained recovery."

-Louis Goss

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07-31-24 0726ET

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