HSBC shares shoot up on announcing up to $2bn share buyback

01 August, 2017, 22:07 | Author: Regina Lloyd
  • HONG KONG HSBC said profits were up Monday in the first half of the year in what it called an “excellent” result after a turbulent 2016

Its profit before tax for the period rose 47% to $5.3 billion. Reported revenue, however, dipped 11 percent to $26.2 billion, partly on the back of currency headwinds.

The new buybacks, to be completed by December, will add to the $3.5 billion of repurchases since a year ago that have helped push the lender's stock up more than 50 percent in the past 12 months.

"In theory a share buyback scheme represents a less risky way for companies to return cash to shareholders because it's a one-off bonus, rather than a regular payment like an ordinary dividend, and so doesn't have to be maintained to the same degree", said Laith Khalaf, senior analyst at Hagreaves Lansdown.

HSBC is facing a shake-up in its top team, as long-serving chairman Douglas Flint prepares to give up his role to former AIA insurance chief executive Mark Tucker. The overall strength and growth for 2017 are heavily boosted by the bank's current Chief Executive Officer Stuart Gulliver who managed to cut the bank's costs.

The bank also announced a further US$2 billion share buy back. Subsequently, the group is growing market share in numerous products that are central to its strategy.

"We see this as a solid set of results, but would expect a somewhat muted share price reaction: the strong recent performance of the shares suggests to us that today's solid print is likely already reflected in the price", Goldman said. But on Monday he said that he could stay at the bank until December 2018, if an external candidate is appointed to take over.

For example, the Bank of England has estimated a single basis-point increase that might result from splitting the clearing of interest-rate swaps could cost firms across the euro zone €22 billion a year, according to a June 27 report.

HSBC has reported a rise in half-year profit and announced a two billion USA dollar (£1.5 billion) share buy-back.

The estimate, one of the most detailed yet by a major bank, includes the costs of relocating up to 1,000 jobs to the French capital as well as associated legal fees, Gulliver said. In January, Gulliver said: "We will move in about two years time when Brexit becomes effective". If it does, it will buy back shares, Gulliver said. The shares have risen from £4.82 to £7.71 over the last 12 months.


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