HSBC announces fresh $3 billion share buyback as third-quarter earnings beat expectations

Europe's largest lender HSBC on Tuesday announced it will repurchase up to $3 billion in shares as third-quarter earnings beat expectations on the back of robust performance from the bank's wealth and personal banking divisions.

Here are HSBC's results compared with LSEG SmartEstimate, which is weighted toward forecasts from analysts who are more consistently accurate:

HSBC's pre-tax profit represented a 10% rise from the $7.71 billion posted a year ago. Profit after tax came in at $6.7 billion, $500 million higher than the third quarter of 2023.

Quarterly revenue grew 5% to $17 billion, compared to the $16.2 billion that was reported a year ago.

The bank's fresh $3 billion share buyback brings the total amount announced this year to $9 billion — $3 billion was announced in the first quarter and another $3 billion in the second quarter. The company added that its board has also approved a third interim dividend of $0.1 per share.

Net interest margin, a measure of lending profitability, dropped to 1.5% from 1.7% a year ago. Basic earnings per share for the quarter came in at 34 cents, higher than the 29 cents of the same period of last year.

Shares of HSBC climbed 3.69% in Hong Kong, with the bank's London-listed stock up 4.59% at 09:58 a.m. London time.

HSBC has benefitted from higher interest rates in recent years. But with that era ending, it was feared that banks could face lower profitability with falling rates.

The lender's third-quarter earnings were "solid, with no major surprises," Michael Makdad, senior equity analyst at Morningstar, told CNBC. "Banking net interest income was stable even as net interest margins narrowed as the rate cycle has started to decline."

HSBC reported an annual rise of 2% in operating expenses for the third quarter, due to higher spend and investment in technology.

Earlier this month, the Financial Times had reported that HSBC boss Georges Elhedery could go for the bank's senior management as part of cost-cutting plans that could save as much as $300 million.

"The primary reason for the reorganization is to create a simpler, more dynamic, more agile, leaner bank," Elhedery said Tuesday in an earnings call, adding that the effort will lead to a reduction of senior roles.

Elhedery, the former chief financial officer, was tapped to lead the company in July, when the bank announced the retirement of former CEO Noel Quinn, who had been at the helm of the company for nearly five years.

The earnings release comes a week after the bank unveiled plans to restructure into four business units, dividing its operations into an "Eastern markets" branch and a "Western markets" division, amid a major overhaul that saw the appointment of its first female finance chief.

HSBC had also vowed to streamline its businesses to "reduce the duplication of processes and decision making."

Correction: This story has been updated to correct the size of HSBC's share buyback in one instance.