HSBC, the biggest of Hong Kong's three currency-issuing banks, said it would buy back US$2 billion in shares as its third-quarter profit beat analysts' estimates, driven in part by release of reserves set aside for soured loans.
The lender, which is based in London, but generates much of its revenue in Asia, suspended dividends and buy-backs last year at the request of its United Kingdom-based regulator, the Prudential Regulation Authority. The suspension was to make sure banks had enough capital available to support the economy during a coronavirus-pandemic-induced downturn.
After the regulator approved investor payouts in December, HSBC paid an annual dividend for 2020 in April this year and restored its interim dividend following its first-half results in August. Its crosstown rival Standard Chartered previously restored buy-backs this year in addition to its dividends.
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"We had a good third-quarter performance, with strong growth in profits supported by additional credit provision releases. Our strategy remains on track, with good delivery in all areas," Noel Quinn, the bank's CEO, said in a statement. "While we retain a cautious outlook on the external risk environment, we believe that the lows of recent quarters are behind us."
In the third quarter, the lender's pre-tax profit was US$5.4 billion, beating a consensus estimate of US$3.78 billion by analysts compiled by the bank, and an improvement over the US$3.07 billion it reported a year earlier. On a net basis, HSBC earned a profit of US$3.54 billion in the third quarter, compared with a profit of US$1.36 billion a year ago.
HSBC said that it released US$700 million of reserves for potential bad loans in the third quarter, compared with a US$800 million charge for so-called expected credit losses in the prior-year period.
Shares of HSBC rose as much as 0.4 per cent in Monday's morning session in Hong Kong ahead of the announcement.
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