HSBC has reported better-than-expected profits in the third quarter, allowing the bank to launch another multibillion-dollar stock buyback as it embarks on one of the biggest overhauls in the lender’s 159-year history.
The London-headquartered bank said strong performance in its wealth division and wholesale banking arm helped push pre-tax profits up 10% to $8.5bn (£6.6bn) in the three months to the end of September. HSBC had been expected to report a 1.3% drop in profits to $7.6bn, according to average analyst estimates.
The stronger-than-expected performance has allowed its new chief executive, Georges Elhedery, to buy back another $3bn worth of HSBC’s shares from shareholders, days after completing a separate multibillion-dollar buyback announced in July. He will hand a further $1.8bn to investors in the form of dividends.
Elhedery, who took over the top job last month, said: “We delivered another good quarter, which shows that our strategy is working.”
The third-quarter results were released a week after Elhedery announced he would be dividing the bank’s operations into eastern and western markets, triggering part of a huge shake-up just weeks into his term as chief executive. HSBC makes the bulk of its profits in Asia.
HSBC has yet to confirm whether Elhedery’s restructuring plans will involve sweeping job cuts, but said last week the plans would “reduce the duplication of processes and decision-making that are built into the current structure”.
Elhedery is reportedly preparing to get rid of some of the bank’s most expensive senior bankers in a move that could save as much as $300m, the Financial Times reported this month.
It follows a previous overhaul by former HSBC chief executive Noel Quinn, who in 2020 unveiled plans to cut up to 35,000 jobs by 2022.
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The bank, which employs about 213,978 staff – about 40,000 of which are in the UK – said it would give further details on its latest plans when it reports full-year results in February.
However, some believe that falling interest rates in the lender’s key markets will weigh on HSBC – regardless of its overhaul – in the months ahead. “We think the bank’s earnings momentum has come to an end,” an RBC Capital’s equities analyst, Benjamin Toms, said.
