LONDON: HSBC Holdings reported a 74 per cent rise in the third quarter profit, beating market expectations, as the Asia-focused bank released cash set aside for expected bad loans that have not materialised.
It also announced a share buyback of up to $2 billion, as it continues to return excess capital to shareholders in place of investing cash in its businesses.
While we retain a cautious outlook on the external risk environment, we believe that the lows of recent quarters are behind us, Chief Executive Neil Quinn said in the results statement on Monday.
This confidence, together with our strong capital position, enables us to announce a share buyback of up to US $2 billion, which we expect to begin shortly, he said.
Quinn, confirmed in 2020 just as the pandemic-induced economic crisis began, is betting on Asia to drive growth by moving global executives there and ploughing billions into the lucrative wealth business.
The bank posted a pretax profit of US $5.4 billion for the quarter to September, compared to US $3.1 billion a year earlier and the average estimate of 14 analysts of US $3.78 billion compiled by HSBC.
HSBC released $700 million in cash it had put aside in case pandemic-related bad loans spiked, as opposed to the same time a year ago when it took an US $800 million charge in expectation of such soured debts.
In reality, the bank said that economic conditions have improved while loans have performed better than expected.
The results from the London-headquartered bank come as rivals such as Citigroup are riding a M&A boom, while fending off weakness in the lending business.
HSBC's investment banking business however saw income fall compared to the same period a year ago as its global debt business in particular softened.
HSBC said its cost projections for 2022 had increased from US $31 billion to US $32 billion, due to inflation pressures and the timing of various acquisitions and disposals.