HSBC Holdings PLC took a charge relating to its Chinese commercial real-estate exposure and warned of a weaker performance in its wealth business in Asia, blemishing results for last quarter that saw the lender boost plans to return billions of dollars to investors.
The London-based bank is to initiate a share buyback of as much as US$1 billion, on top of an earlier US$2 billion program, it said in an earnings statement yesterday.
The lender posted a 79 percent increase in adjusted pretax profit to about US$4 billion last quarter, roughly in line with company-compiled estimates.
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The bank said it will pay a second interim dividend of US$0.18 per share.
The US$450 million impairment charge — largely relating to offshore China commercial real-estate exposures booked on its Hong Kong balance sheets — was the result of local policy measures that had led to an increase in “refinancing risk and liquidity pressures,” HSBC chief executive officer Noel Quinn said in a telephone interview.
“Those market conditions have improved, to some extent, in the early part of 2022,” Quinn said.
HSBC chief financial officer Ewen Stevenson said that the conditions were not a one-off, but were “eminently manageable.”
Separately, Quinn said in an earnings statement that the lender carries “good business momentum” into this year, but it expects a weaker wealth performance in Asia this quarter.
HSBC follows other global banks in boosting shareholder returns as rising interest rates buoy lending income.
At the same time, the economic outlook is being clouded by factors including geopolitical tensions, inflation and effects of the COVID-19 pandemic, including in HSBC’s key market of Hong Kong.
A year ago, HSBC unveiled a strategic refresh with its pivot to Asia. The strategy is focused on managing more of the wealth of Asia’s growing ranks of millionaires and billionaires, as well as the region’s mass affluent.
The plan involves an investment of US$6 billion across Asia, targeting wealth management, commercial banking and markets.
The past years have been dominated by repeated restructurings that have included cutting 35,000 jobs, relocation of senior executives from London to Hong Kong, and most recently coping with the fallout from the pandemic.
However, HSBC said Hong Kong’s curbs on travel and social interaction are hurting the economy, and might affect the ability to hire and keep staff in the Asian financial hub.
“The evolving COVID-19 restrictions in Hong Kong, including travel, public gathering and social distancing restrictions, are impacting the Hong Kong economy, and may affect the ability to attract and retain staff,” the bank said.
HSBC’s comments came after Standard Chartered PLC CEO Bill Winters last week said that the territory’s travel curbs could in the long run hurt its status as a financial hub compared with other regional centers.
Additional reporting by Reuters
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