HSBC is giving a further $4.8bn to shareholders, providing a final parting gift from the outgoing chief executive, Noel Quinn, after a rise in second-quarter profit.
The bank, headquartered in London, said it would buy back another $3bn (£2.3bn) worth of shares from investors, who will receive $1.8bn in fresh dividends.
It will mean Quinn will have paid $34.4bn to shareholders during his final 18 months in post, as part of a strategy that helped to fend off calls to break up the bank, led by its top shareholder, China’s Ping An Asset Management.
In September he will hand the reins to the chief financial officer, Georges Elhedery, who was this month revealed as his successor.
The payouts come after HSBC managed to eke out a 1.5% increase in pre-tax profit to $8.9bn in the second quarter, up from $8.7bn a year earlier. The bank, which makes the bulk of its profits in Asia, benefited from growth in its wealth division and increased demand for investment banking services.
It helped offset an 11% drop in net interest income, including in the UK, where increased competition for customers has meant banks have had to pay more to savers, and offer more affordable mortgage rates, in order to attract business. Net interest income accounts for the difference between what a bank pays to savers versus what it charges borrowers.
However, the bank said it was increasing its forecasts for net interest income for the full year from $41bn to $43bn, but said this depended on the path of global interest rates.
“After achieving a record profit performance in 2023, we had a strong first half financial performance that reflected our strategy execution and revenue diversification over the past five years,” Quinn said.
“We remain confident that we can deliver attractive returns, even in a lower interest-rate environment, as a result of macroeconomic trends that play to our strengths, market-leading businesses connecting high-growth markets that we are continuing to invest in, and ongoing cost discipline.”
While HSBC put aside $346m for potential defaults, it was much lower than the $913m it had to reserve last year, including for bad debts linked to China’s property market downturn. Elhedery said he could not rule out further charges related to the country’s real estate fallout, but added: “The big challenges are behind us.” The lower charges also reflected improving economic conditions in the UK.
Elhedery said he was prepared to navigate a potential flare-up of political tensions between the US and China if Donald Trump won the US presidential election in November. “Our main focus has been and will remain … the long-term needs of our customers and the best interest of our investors. We’ve done this for 159 years. We’ve managed geopolitical pressures and we’ll continue to do so.”
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The UK high street challenger Metro Bank also released earnings on Wednesday, showing it dipped to a pre-tax loss of £33.5m in the first half of the year, having reported a profit of £15.4m a year earlier.
It came amid a 22% drop in net interest income, as the bank was forced to pay out more to savers following Metro’s campaign to increase deposits at the end of last year.
The bank had been trying to make up for an outflow of cash last autumn, when market panic over the state of its balance sheet forced it to enter into a £925m rescue deal that left the bank 53%-owned by the Colombian billionaire Jaime Gilinski Bacal.
However, Metro’s shares jumped more than 32% on Wednesday morning as investors cheered a turnaround plan that the bank said would return it to profitability in the fourth quarter of this year. It is the largest-ever one-day gain for Metro Bank shares, which rose to 57.2p, marking their highest level since its October crisis.