HSBC reports strong 3Q results + plans a fresh USD 3 bn stock buyback

HSBC posted pre-tax net income of USD 8.5 bn in 3Q 2024, rising 10.4% y-o-y, according to its earnings release. The improvement was fueled by growth in wealth and personal banking and gains across foreign exchange, equities, and global debt markets. However, net interest income dropped by USD 1.6 bn due to increased funding costs and asset sales. Operating expenses rose 2% to USD 8.1 bn, driven by technology investments and inflationary pressures. The bank completed the distribution of USD 4.8 bn to shareholders for last quarter’s results, which will bring HSBC’s total payouts in 2024 to USD 18.4 bn.

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The lender also announced a new stock buyback of “up to” USD 3 bn, which is expected to wrap before its full-year earnings are released in February, according to the earnings release. The buyback announcement comes as the bank’s earnings came in stronger than expected, Bloomberg says. The bank “has already handed USD 34.4 bn to shareholders in the past 18 months, much of it in the form of stock buybacks, which have become one of the bank’s preferred ways to distribute capital to its investors,” the business information service notes.

Market reaction: HSBC’s shares closed up 3.9% in London yesterday, according to market data. The shares hit an intraday high of 4.9%, Bloomberg says.

ICYMI- Last week, HSBC unveiled a major restructuring plan to merge its global commercial and investment banking units and reorganize its geographical division to create standalone units for Hong Kong and the UK, while combining Asian Pacific and Middle East operations into one Eastern division. However, HSBC’s Chief Georges Elhedery refuted any suggestions that these moves are leading to a break up of the banking group, The Guardian said. “This is not either a precursor or an intent or a preparation for any split,” he said.

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OVER IN THE US OF A- Top Wall Street executives — including the chief executives of Goldman Sachs, Morgan Stanley, and Standard Chartered, among others — doubt the US Federal Reserve will enact more than one more interest rate cut by year-end, Bloomberg reports. Speaking at a panel at the Future Investment Initiative forum in Riyadh, the executives signaled that further cuts are unlikely to be as significant as traders predict.

Traders anticipate that the Fed might implement two more rate cuts this year, potentially lowering the rate to c. 3.5% by the end of 2025 — following the first rate reduction in September. While Goldman Sachs CEO David Solomon said future predictions are difficult to make until after the US presidential elections are through “and we get a clear sense of policy actions,” BlackRock CEO Larry Fink suggested that cuts may not come quickly or deeply, especially given persistent high inflation.

MARKETS THIS MORNING-

Japan’s Nikkei is among the only Asia-Pacific indexes in the green in early trading this morning, while the Hang Seng Index, mainland China’s Shanghai Composite, and South Korea’s Kospi are all in the red.

Over on Wall Street, futures suggest that markets will open in the green after the S&P 500 and Nasdaq both closed up yesterday.

THE CLOSING BELL: TADAWUL-

The TASI rose 0.1% yesterday on turnover of SAR 7.3 bn. The index is up 0.8% YTD.

In the green: Al Baha (+8.3%), Zamil Indust. (+6.4%) and Maaden (+3.1%).

In the red: Leejam Sports (-6.3%), Riyadh Cement (-4.1%) and Arabian Mills (-3.5%).

THE CLOSING BELL: NOMU-

The NomuC fell 0.7% yesterday on turnover of SAR 54.2 mn. The index is up 8.5% YTD.

In the green: Naseej Tech (+16.9%), Rawasi (+4.3%) and CMCER (+4.2%).

In the red: Al Rashid Industrial (-8.9%), Burgerizzr (-8.7%) and Waja (-8.3%)