HSBC in $2 billion share buyback as interim profits rise
● Outgoing Scots chairman Douglas Flint describes Brexit talks as ‘complex’
announced a $2 billion (£1.5bn) share buyback alongside rising profits yesterday – as outgoing Scots-born chairman Douglas Flint said the Brexit negotiations were proving lengthy and complicated.
The bank, which has skewed its focus back to its Asian historical heartland in recent years, has said that it may transfer 1,000 jobs from London to Paris depending how the EU withdrawal talks went. Group chief executive Stuart Gulliver revealed yesterday the exercise could cost $300 million.
As HSBC unveiled its third share buyback in a year and a 5 per cent rise in interim pre-tax profit to $10.2bn (£7.8bn), Flint said the two-year talks for Britain to leave the EU were “complex and time-consuming”. He said: “The essential questions that have to be addressed are whether, at the conclusion of the negotiations, the economies of Europe will contincial ue to have access to at least the same amount of financing capacity and related risk management services, and as readily available and similarly priced, as they have enjoyed with the UK as part of the EU.”
The bank said customer activity across all its business segments had proved resilient in the first half of 2017 despite geopolitical tensions “and ambiguous predictions around the shape of transition to, and final form of, the UK’S future relationship with its major trading partners in the EU”.
Flint, an HSBC veteran who was finance director before becoming chairman at the end of 2010, is to be replaced by Mark Tucker, former chief executive of the AIA insurance giant, on 1 October 2017.
Gulliver is also to step down next year, with Tucker leading the search for a successor. The group’s profit increase in the six months to June came despite revenues falling 12 per cent to $26.2bn.
Flint said: “Markets-based revenues benefited from market share advances, commerhsbc banking customer activity was robust, wealth management and insurance revenues were notably stronger in Hong Kong, and credit experience globally remained remarkably sound.
“As central bank interest rates edged higher, led by the US, we began to benefit from improved margins on our core deposit bases, providing a welcome enhancement to the group’s revenue mix, given the likely trajectory of interest rates over the medium term.”
Gulliver, who has been chief executive since January 2011, has overseen significant job cuts and asset sales to boost profits in the aftermath of the financial crash.
He said: “We remain on track to achieve around $6bn of annualised cost savings by the end of the year, in line with the revised expectations that we set at our annual results.
“In the past 12 months we have paid more in dividends than any other European or American bank and returned $3.5bn to shareholders through share buybacks.” The bank declared an unchanged interim divi of 51 cents.