HSBC Holdings PLC’s (LSE:HSBA, NYSE:HSBC) return to share buybacks was deemed a bit on the small side, despite the Asia-focused lender’s stronger-than-expected quarter and improving business momentum.
The FTSE 100’s largest company announced a $1 billion buyback alongside a 60% rise in second-quarter pre-tax profit to $10.1 billion
It was the first buyback since HSBC paused repurchases to fund its acquisition of the remaining shares in Hang Seng Bank in October. Jefferies analyst Joseph Dickerson called it a “modestly lower buyback than we expected”, which “may underwhelm”. He had pencilled in $2 billion, a figure he said appeared to match investor expectations, although there was no formal consensus forecast.
UBS had also expected $2 billion. Analyst Jason Napier said he was “surprised” the return was not bigger given the strength of HSBC’s first-half performance. The disappointment looks more about restrained ambition than weak trading, the analysts suggested.