HSBC Holdings PLC (LSE:HSBA) shares fell over 4% after the bank reported a 29% plunge in second-quarter profit, but still unveiled another $3 billion share buyback and $0.10 quarterly dividend.
Profit before tax came in at $6.3 billion for the second quarter, down $2.6 billion year-on-year due to a $2.14 billion impairment charge relating to a longstanding investment in China 'associate' Bank of Communications (BoCom) and exposure to the Hong Kong real estate market, which led to expected credit losses rising $900 million to $1.9 billion.
Reported profits were around $660 million worse than analysts were expecting.
The new share buyback doubles the amount launched since the start of the year, with the interim dividend also repeated from the first-quarter payout.
CEO Georges Elhedery said: "We're making positive progress in becoming a simple, more agile, focused organisation built on our core strengths."
He said the first half of 2025, despite seeing PBT fall $5.7 billion to $15.8 billion, saw each of the lender's four businesses sustain momentum in their earnings and grow revenue.
"This gives us confidence in our ability to deliver our targets," he said. "We continue to navigate this period of economic uncertainty and market volatility from a position of strength, putting the changing needs of our customers at the heart of everything we do."
Tangible net asset value per share rose to $9.17, beating consensus by 2% due to favourable FX and cash flow hedge movements.
Return on tangible equity was 11.5% on a reported basis and 18.2% excluding notable items, the latter well ahead of the 15.7% forecast.
Management reiterated its guidance for a mid-teens RoTE (excluding notable items) through FY25 to FY27, though it now expects the FY25 impairment ratio to be around 40 basis points, the upper end of its prior 30-40bps range.
Analysts said that underlying profits, if the BoCom losses, restructuring charges and disposal costs were stripped out, were ahead of expectations, driven by stronger non-interest income.