HSBC Holdings PLC said its first-half profit tumbled 29 percent, slammed by slowing growth in its home markets in Britain and Hong Kong, but Europe’s biggest bank cheered investors by announcing plans to buy back up to US$2.5 billion of its shares.
The lender’s shares rose as much as 1.9 percent after the buyback took the sting out of a drop it reported yesterday in January-to-June pretax profit to US$9.7 billion, just below an average estimate of US$10 billion compiled by Thomson Reuters.
Analysts joined investors in welcoming the buyback, along with a commitment from the London and Hong Kong-based bank to maintain current dividend levels for the foreseeable future, despite gloom in its key markets.
Photo: AFP
However, as Britain’s vote to leave the EU clouds economic prospects, and Hong Kong absorbs slower growth in China, HSBC said it had decided to “remove a timetable” for reaching its targeted return on equity in excess of 10 percent by the end of next year.
Return on equity at the end of June was 7.4 percent.
HSBC also said it was committed to sustaining annual ordinary dividend for the year at current levels for the foreseeable future. That commitment, along with the buyback, was described by Bernstein analysts in a note as positive for the bank’s shares in the short term.
However, HSBC Holdings chief executive officer Stuart Gulliver said in a telephone call with reporters that the bank had removed the word “progressive” from its guidance on dividend payout plans, as a reflection of tougher market conditions.
“Progressive was interpreted by everyone as meaning it is going to go up every quarter notwithstanding what is happening in the world, so what we are saying is we are committed to sustain the dividend at the current level,” Gulliver said.
Gulliver said in a statement the buyback — following the disposal of HSBC’s Brazil unit last month in a US$5.2 billion deal — “demonstrated the strength and flexibility” of its balance sheet.
The bank reported its earnings as clouds gather over Europe’s banking sector, rattled by deteriorating profits and yields amid record low interest rates, as well as higher regulatory costs.
“Following the outcome of the [Brexit] referendum ... there has been a period of volatility and uncertainty which is likely to continue for some time,” Gulliver said in the statement. “We are actively monitoring our portfolio to quickly identify any areas of stress, however it is still too early to tell which parts may be impacted and to what extent.”
HSBC said its core capital ratio, critical to its ability to sustain dividend payouts, rose to 12.1 percent, up from 11.9 percent at the end of December last year, adding that the sale of its Brazilian operations is expected to add a further 0.7 of a percentage point in the third quarter.
Stephen Garrett, a 27-year-old graduate student, always thought he would study in China, but first the country’s restrictive COVID-19 policies made it nearly impossible and now he has other concerns. The cost is one deterrent, but Garrett is more worried about restrictions on academic freedom and the personal risk of being stranded in China. He is not alone. Only about 700 American students are studying at Chinese universities, down from a peak of nearly 25,000 a decade ago, while there are nearly 300,000 Chinese students at US schools. Some young Americans are discouraged from investing their time in China by what they see
Taiwan Transport and Storage Corp (TTS, 台灣通運倉儲) yesterday unveiled its first electric tractor unit — manufactured by Volvo Trucks — in a ceremony in Taipei, and said the unit would soon be used to transport cement produced by Taiwan Cement Corp (TCC, 台灣水泥). Both TTS and TCC belong to TCC International Holdings Ltd (台泥國際集團). With the electric tractor unit, the Taipei-based cement firm would become the first in Taiwan to use electric vehicles to transport construction materials. TTS chairman Koo Kung-yi (辜公怡), Volvo Trucks vice president of sales and marketing Johan Selven, TCC president Roman Cheng (程耀輝) and Taikoo Motors Group
MAJOR DROP: CEO Tim Cook, who is visiting Hanoi, pledged the firm was committed to Vietnam after its smartphone shipments declined 9.6% annually in the first quarter Apple Inc yesterday said it would increase spending on suppliers in Vietnam, a key production hub, as CEO Tim Cook arrived in the country for a two-day visit. The iPhone maker announced the news in a statement on its Web site, but gave no details of how much it would spend or where the money would go. Cook is expected to meet programmers, content creators and students during his visit, online newspaper VnExpress reported. The visit comes as US President Joe Biden’s administration seeks to ramp up Vietnam’s role in the global tech supply chain to reduce the US’ dependence on China. Images on
New apartments in Taiwan’s major cities are getting smaller, while old apartments are increasingly occupied by older people, many of whom live alone, government data showed. The phenomenon has to do with sharpening unaffordable property prices and an aging population, property brokers said. Apartments with one bedroom that are two years old or older have gained a noticeable presence in the nation’s six special municipalities as well as Hsinchu county and city in the past five years, Evertrust Rehouse Co (永慶房產集團) found, citing data from the government’s real-price transaction platform. In Taipei, apartments with one bedroom accounted for 19 percent of deals last