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HSBC announced a $3bn share buyback on Wednesday and said its financial controller Jon Bingham had been appointed interim chief financial officer, as profits rose in the second quarter.
Reported pre-tax profits at the UK-based bank increased to $8.9bn, from $8.8bn a year earlier, beating analysts’ expectations of $7.8bn.
It marked HSBC’s final earnings report under outgoing chief executive Noel Quinn, who has led the bank for five years and will be replaced in September by Georges Elhedery, its chief financial officer.
“We are confident that we have the right strategy and model to increase revenue, even in a lower interest rate environment,” said Quinn.
Bingham will act as chief financial officer on an interim basis from September, in addition to his current role, the bank said. He joined HSBC in 2020 and previously worked at KPMG for two decades. Elhedery said Bingham had “outstanding technical accounting and regulatory knowledge and expertise”.
The $3bn buyback is the latest in a series of benefits for HSBC shareholders in recent years. Boosted by higher rates, the bank has announced multiple rounds of share buybacks and raised its dividend. On Wednesday, it announced an interim dividend of 10 cents a share.
HSBC, one of the world’s largest deposit-taking institutions, has been a big beneficiary of higher interest rates in recent years, but has been under pressure to cut costs and show it can still grow once the benefit of rising rates tails off. More than half of HSBC’s $66bn in revenue last year came from net interest income.
Net interest income fell by $1.4bn in the first half of this year to $16.9bn, and the bank’s net interest margin, a key measure of how profitable its lending is, fell to 1.62 per cent from 1.7 per cent a year earlier.
It reported expenses of $8.1bn in the second quarter, up 3 per cent from a year earlier, which it said was partly due to higher technology costs and inflation.
Elhedery’s main tasks when he takes the top job will include reining in costs, boosting growth in less rate-sensitive businesses and navigating a complex geopolitical situation as China-US tensions continue.
The bank is based in the UK, but Hong Kong is by far the biggest single source of its revenues, and it depends on the US for its crucial dollar clearing licence.
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