HSBC (LSE:HSBA) is due to begin a share buyback of up to $1 billion on Thursday, two days after disappointing quarterly revenue and slowing wealth growth sent its London-listed shares down about 6%.
The bank appointed Goldman Sachs to conduct the purchases from October 29 through no later than February 19, 2027. Repurchased shares will be cancelled, reducing the number in circulation, according to Wednesday’s stock exchange announcement.
The programme follows third-quarter results that showed a sharp rise in profit but offered little improvement to the bank’s outlook. Investors focused instead on weaker-than-expected revenue and whether its wealth business can sustain the growth recorded earlier this year.
HSBC Share Buyback Starts October 29
HSBC appointed Goldman Sachs to purchase ordinary shares from October 29 through no later than February 19, 2027. The arrangement allows purchases on UK trading venues and the Hong Kong Stock Exchange within agreed limits.
The bank announced the buyback alongside its third-quarter results on Tuesday and confirmed the execution arrangements on Wednesday. Its stated purpose is to reduce outstanding ordinary shares through cancellation.
The $1 billion limit is a maximum purchase amount. The timetable does not mean the entire sum will be s pent immediately, with purchases spread across the programme’s duration. For shareholders, a lower share count can support earnings per share, provided profits hold steady. The effect on the market price will also depend on earnings expectations and broader investor demand.
Why HSBC Shares Fell After Q3 Results
HSBC’s London-listed shares dropped about 6% on October 27 after third-quarter revenue reached $18.6 billion, below forecasts of approximately $19 billion, Reuters reported. Pretax profit increased 32% to $9.6 billion, broadly matching expectations. However, part of that improvement reflected the absence of legal provisions recorded in the same quarter last year.
Investors also received no upgrade to the bank’s performance guidance. The combination left the results short of expectations built around strong recent earnings across European lenders.
The buyback matched the amount announced with the previous quarter’s results. Reuters reported that such distributions had become largely expected, limiting their ability to offset disappointment elsewhere in the report.
HSBC Earnings Outlook: Deposit Competition Pressures Margins
Competition for deposits in Hong Kong and the UK remains another challenge. Time deposits accounted for 38% of HSBC’s Hong Kong portfolio, up two percentage points from the previous quarter. Jefferies analysts warned that offering higher rates to attract deposits could erode margins, Reuters reported.
The bank must balance retaining customer funds with the interest expense required to secure them. More deposits can support lending, but higher funding costs can reduce the profit earned on that business.
Credit losses provided some relief. Expected credit losses fell 17% to $800 million, helped by lower charges linked to Hong Kong commercial property and other businesses.
HSBC Dividend Adds to Shareholder Returns
HSBC approved a third interim dividend of $0.10 per ordinary share alongside the buyback announcement. The bank completed its previous $1 billion repurchase programme on September 28.
The latest programme continues those distributions, but the earnings reaction shows that investors are also looking for stronger revenue growth. A recovery in wealth income and control over deposit costs would help address the concerns behind Tuesday’s decline.
How much is HSBC spending on the buyback?
HSBC has authorised purchases of up to $1 billion. Repurchased ordinary shares will be cancelled.
Why did HSBC shares fall despite higher profits?
Quarterly revenue missed forecasts, wealth revenue was flat and the bank left its performance guidance unchanged.
What is HSBC’s latest dividend?
HSBC approved a third interim dividend of $0.10 per ordinary share.
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