HSBC Holdings on Tuesday announced a fresh $2 billion share buyback on Tuesday to raise its key profitability target as the increasing central bank interest rates across the world helped it more than double income for the first half of the year, according to Reuters reports.
The financial services company raised its near-term return on tangible equity goal to at least mid-teens for 2023 and 2024, from a previous target of at least 12% from 2023 onwards. It reported a return on tangible equity of 9.9% for 2022.
HSBC’s results show a comparatively modest performance at its investment bank, where income rose 16%, outshone by nearly 40% gains in the commercial banking and wealth divisions. This reflected an environment where rising interest rates around the world are boosting lending income.
The lender has lifted its forecast of this year’s net interest income from $34 billion to $35 billion, however, some analysts had looked for an upgrade nearer to $36 billion, as per Reuters reports.
In Hong Kong, HSBC’s shares jumped as high as HK$66.70 ($8.55), their highest since May 2019, before settling to be up 1.2% by 0625 GMT. Its shares in London rose 2% in early trading, against a flat FTSE 100 benchmark index.
Europe’s largest bank with a market value of $162 billion posted a pretax profit of $21.7 billion for the first six months this year, versus $9.2 billion a year earlier and better than analysts’ average forecast of $20.9 billion. The London-headquartered bank said it would pay an interim dividend of 10 cents per share, Reuters reported.
In the bank’s earning statement, CEO Noel Quinn said, “With more mortgage customers due to roll off fixed-term deals in the next six months, and further rate rises expected, tougher times are ahead.”
The bank said its higher credit loss of $1.3 billion in the first six months, versus $1.1 billion a year earlier, resulted partly from exposure to China commercial real estate sector and UK commercial banking.
