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HSBC Holdings reported a pretax profit of $19.5 billion for the first six months of the year, up 23% from $15.8 billion in the same period a year earlier and ahead of the $18.9 billion analysts had forecast. The bank also raised its guidance for net interest income, now expecting the figure to exceed $46 billion for the year, having previously said it would reach that level.
The results mark the resumption of HSBC’s share buyback programme, with the bank announcing a plan of up to $1 billion. The buybacks had been paused for three quarters following HSBC’s announcement late last year that it was taking Hong Kong lender Hang Seng Bank private. HSBC also declared a second interim dividend of $0.1 per share, following a $0.1 payout in May.
Chief executive Georges Elhedery pointed to the significance of Hong Kong within the group’s Asian wealth strategy, saying the market remained central to the growth of that business. The bank and Hang Seng brands together acquired 640,000 new clients in the first six months of the year, and wealth revenue rose 18% from the prior year, with growth concentrated in Asian markets. Elhedery also said that account-opening activity had been largely unaffected by a wealth crackdown launched by Beijing in late May, which was aimed at restricting illegal cross-border flows.
Corporate and institutional banking has become HSBC’s largest source of income, accounting for a third of first-half profit, supported by rising demand from clients operating across borders. Elhedery said the bank has more than 70 initial public offerings lined up in Asia, of which 40 are in Hong Kong, even as HSBC remains absent from the US dealmaking market following earlier exits from that business.
Analysts at Citi noted that the new $1 billion buyback fell below a consensus estimate of $2.2 billion, and questioned whether HSBC intends to transition toward smaller, more frequent buyback rounds or whether the current announcement represents an initial step toward a larger resumption. HSBC’s Hong Kong-listed shares, which had touched a record high of HK$169.5, were flat in afternoon trading following the earnings release.
The results follow a similarly strong showing from rival Standard Chartered, which last week reported a forecast-beating first-half profit driven by fee income growth, extending a broader recovery among Europe’s large banks that has been supported by increased trading activity and resilient interest income despite reductions in central bank rates.
The gap between the $1 billion buyback and the $2.2 billion consensus estimate leaves open the pace at which capital return to shareholders will resume in coming quarters. With corporate and institutional banking now HSBC’s single largest contributor to profit, the bank’s active Asian IPO pipeline and its continued streamlining of markets where it has exited retail and insurance operations are likely to remain central to how that income base develops.