HSBC will launch a $3 billion (£2.5 billion) share buyback despite quarterly profits missing market expectations, the bank announced this morning.
Asia-focused, London-based HSBC said third-quarter pre-tax profit more than doubled to $7.71 billion from $3.23 billion a year before, which it said reflected the positive impact of a higher interest rate environment. However, the figure fell short of company-compiled analyst estimates of $8.10 billion.
Diluted and basic earnings per share rose to $0.29 from $0.10.
"The increase was in part due to a $2.3 billion impairment in Q3 2022 relating to the planned sale of our retail banking operations in France, of which $2.1 billion was reversed in Q1 2023 as the completion of the transaction became less certain," it said.
"We now expect to reclassify these operations to held for sale in 4Q23, at which point the impairment would be reinstated."
Net interest income rose 15% to $9.25 billion from $8.01 billion, as net fee income increased 5.3% to $3 billion from $2.85 billion. Net operating income climbed 45% to $15.09 billion from $10.44 billion, which was short of analyst estimates of $16.24 billion.
Net interest margin rose to 1.70% from 1.51% a year prior, but slipped from 1.72% in the prior quarter.
At the end of the period, the bank's CET1 ratio rose to 14.9% from 14.2% the year prior, and 14.7% at the end of June. The increase was due to capital generation, as well as lower risk-weighted assets, HSBC said.
For the period it will now pay out an interim dividend of $0.10 per share, along with a further share buyback of up to $3.0 billion, which will begin "shortly" and complete at the time of its full-year results announcement on February 21.
In terms of outlook, HSBC said it remains "committed to targeting" a return on average tangible equity in the mid-teens for this year and next, excluding the impact of material acquisitions and disposals.
It maintained guidance of net interest income for 2023 of over $35 billion, having achieved $32.61 billion in 2022.
"We have had three consecutive quarters of strong financial performance and are on track to achieve our mid-teens return on tangible equity target for 2023," chief executive Noel Quinn said.
"There was good broad-based growth across all businesses and geographies, supported by the interest rate environment.
"Our Wealth business also gained further traction, attracting $34 billion of net new invested assets in the quarter and growing wealth balances by 12% compared with last year."
Shares in HSBC were up 0.4% at HKD58.30 each in Hong Kong before the midday break on Monday. In London shares were up 0.7% to £6.05.
By Elizabeth Winter, Alliance News senior markets reporter
