HSBC PLC (LSE:HSBA) has pushed the button on a big shareholder payout programme with a US$2bn share buyback after profits soared in its latest quarter.
Profits in the three months to end September jumped 74% to US$5.4bn, driven by the release of previous bad debt provisions and a higher share of profit from associates.
“We remain well placed to fund growth and step up capital returns, and now intend to normalise our CET1 position to be within our 14% to 14.5% target operating range by the end of 2022," said Noel Quinn, chief executive.
All regions were profitable in the quarter with Asia chipping in US$$3.3bn while the UK’s contribution tripled to US$1.5bn.
Reported revenues were up just 1% to US$12bn, but the Asia-focused bank said that the revenue outlook is becoming more positive.
Fees are picking up again while net interest income, which has been under pressure due to lower interest rates, should start to reverse as lending improves and rates start to rise again earlier than expected.
As a result, HSBC said it expects to release more bad debt provisions at the end of the year.
Quinn added: “We continued to demonstrate strong cost control over the course of the year.
“Given inflationary pressures, continued investment and the impact and timing of recently announced acquisitions and disposals, we now expect adjusted costs of approximately $32bn for 2021 and 2022,
“We intend to achieve this through a combination of growth and capital returns, as well as from an expected $20bn to $35bn uplift in RWAs [assets] in 2022 due to regulatory developments."