HSBC H1 Profit Rises, Revenues Weak; Plans Up To $2 Bln Share Buyback; Stock Up

Shares of HSBC Holdings Plc (HSBC,HSBA.L) were gaining around 3 percent in the early morning trading in London after the Asia-focused lender reported Monday higher profit in its first half on lower charges, despite weak revenues. The company further said it will execute a further share buy-back of up to $2 billion in the second half.

Looking ahead, the company said that in spite of geopolitical tensions and uncertainties, the major economic regions seem more synchronised in their growth trajectories than ever.

Business investment is rising in the US and could expand further if promised tax reform can be delivered. Confidence is notably improving within the eurozone.

The UK is, however, showing some signs of slower growth as the inflationary impacts of a weaker currency, Bank of England caution over consumer indebtedness and uncertainties over the EU exit negotiations constrain consumer and business confidence and spending, the company noted.

Douglas Flint, Group Chairman, said, “The risks to economic growth remain concentrated around geopolitical events and political mis-steps. Additionally, the formidable challenge within Europe of negotiating both the terms of the UK’s exit from the EU and the basis of the future relationship will dominate political agendas for some time, crowding out time for other policy considerations.”

For the first half, profit before tax increased 5 percent to $10.2 billion from last year’s $9.7 billion. Earnings per share amounted to $0.35, higher than $0.32 a year ago.

Adjusted profit before tax was $12 billion, compared to $10.7 billion a year ago.

Reported loan impairment charges and other credit risk provisions decreased by $1.7 billion, and reported operating expenses decreased by $2.2 billion.

Loan impairment charges and other credit risk provisions were $663 million, down from last year’s $2.37 billion.

Reported revenues, meanwhile, declined 11 percent to $26.2 billion from last year’s $29.5 billion, largely reflecting a net unfavourable movement in significant items of $3.1 billion.

Adjusted revenue increased 3 percent, reflecting improved performance in Retail Banking and Wealth Management, Global Banking and Markets and Commercial Banking. This was partly offset by lower adjusted revenue in Corporate Centre and Global Private Banking.

Net interest income was $13.78 billion, lower than prior year’s $15.76 billion. Net fee income also declined, while net trading income increased from last year.

The company said it delivered…

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