HSBC launches $3 billion buyback, profit disappoints on rising costs
By Selena Li and Lawrence White
HONG KONG/LONDON (Reuters) — HSBC announced on Monday a fresh $3 billion share buyback, and a more than doubling of third-quarter profit that nonetheless disappointed as upward pressure on wages and technology spending pushed costs above forecasts.
The results from Europe's biggest bank showed the hurdles it faces in delivering the consistent returns its long-suffering investors expect, now that interest rates worldwide are rising, even as it showers them with cash from dividends and buybacks.
HSBC said costs will increase by up to 5% this year excluding the acquisition of Silicon Valley Bank's British unit, more than its previous goal of a 3% rise, as spending grows and it considers bigger bonuses for bankers in the fourth quarter.
The bank posted a pre-tax profit of $7.7 billion for the July to September quarter, versus $3.2 billion a year earlier, but the result trailed the $8.1 billion mean average estimate of brokers compiled by HSBC.
HSBC's profit was below expectations and «costs are likely to be the area of controversy», said London-based Jefferies analyst Joe Dickerson, though he added the share buyback was $1 billion larger than his forecast.
The London-headquartered bank with a market value of $118.6 billion said it aimed to complete the share buyback by next February, lifting the total buybacks announced this year to $7 billion.
It also set the third interim dividend this year of 10 cents per share, bringing the total annual payout so far to 30 cents per share.
HSBC shares in London rose 1% in early trading on Monday, in line with the benchmark FTSE 100 index. Its Hong Kong-listed shares were down 1.46%, underperforming the market's wider financial index, which fell 1.03%.
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