HSBC Holdings PLC is emerging from its COVID-19 and restructuring troubles to become more reliably profitable, chief executive officer Noel Quinn said Monday as he announced the start of a US$2 billion share buyback.
Last year, the Asia-reliant lender had a tumultuous time, as its fortunes took a hammering from simmering geopolitical tensions as well as the COVID-19 pandemic.
Since then, Quinn has overseen a dramatic restructuring, slashing the bank’s workforce by about 35,000 employees and refocusing on its most profitable areas in Asia and the Middle East, he said, adding that the tactic has paid dividends.
Photo: AFP
“While we retain a cautious outlook on the external risk environment, we believe that the lows of recent quarters are behind us,” Quinn wrote in a note attached to the bank’s third-quarter results.
“This confidence, together with our strong capital position, enables us to announce a share buyback of up to US$2 billion, which we expect to commence shortly,” he added.
The results statement showed that HSBC’s pre-tax profit more than doubled year-on-year in the third quarter to US$5.4 billion. Profit after tax came in at US$4.2 billion, up from US$2.2 billion in the same period last year.
HSBC makes 90 percent of its profit in Asia, with China and Hong Kong the major drivers of growth. Earlier this year, the bank sold its 90 branches in the US and completed a long-running disposal of its unprofitable French retail business.
While all banks were hit hard by the pandemic, HSBC also had to deal with another added wrinkle — geopolitical tensions.
HSBC’s historical and present-day connections with China are its major selling point and a source of vulnerability.
It has found itself more at risk than most global banks to the increasingly frayed relationship between China and Western powers — especially after Beijing imposed its National Security Law on Hong Kong last year.
HSBC endorsed the legislation, a move that led to criticism from lawmakers in the UK and the US, and has frozen the accounts of several Hong Kong democracy advocates at the request of the local authorities.
The lender has also found itself called out by Chinese media for providing information that helped lead to the arrest in Canada of a top Huawei Technologies Co (華為) chief financial officer Meng Wanzhou (孟晚舟).
HSBC said it must obey the laws in each jurisdiction it operates in.
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