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Actionable news in HSBC: HSBC HOLDINGS PLC,

HSBC Rises as Second Quarter of Growth Backs Turnaround Story

  • Bank to buy back $2 billion of stock as capital buffer rises
  • Investment bank profit jumps as advisory offsets poor trading

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After posting a second quarter of revenue growth and with plans to return another $2 billion of cash to investors, departing boss Stuart Gulliver’s six-year turnaround of HSBC Holdings Plc might finally be gathering momentum.

Adjusted revenue and pretax profit rose 4 percent and 13 percent respectively, beating analysts’ estimates, as the bank continued to pump capital into better-returning markets in Asia and earnings at the investment bank surged. The latest buyback means the London-based bank has pledged to repurchase $5.5 billion of shares in the past year, and executives said they’re prepared to do more.

“The key market focus will be on the improved revenue and capital formation trends,” Goldman Sachs Group Inc. analysts wrote in a note Monday. “Investors will undoubtedly focus on what implications this could have for future capital returns.”

The results indicate Gulliver’s revamp of HSBC is starting to bear fruit as the bank starts to grow again after five years of declining revenue. The chief executive officer has spent most of his tenure shrinking and imposing central control over HSBC’s vast global network, exiting almost 100 businesses and 18 countries while enduring several costly misconduct scandals.

“You could argue there is a more focused, logical, cohesive set of businesses that remain and there is absolutely growth” on show at HSBC now, Gulliver said on a call with analysts.

New Chairman Mark Tucker, who will succeed Douglas Flint in October, is...


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