HSBC share price heads south despite $2bn buyback

HSBC Q1 profit misses estimate, unveils $2-bn share buyback

He said: "Our global businesses performed well in the first quarter, maintaining momentum from the end of 2017".

"We are engaged in active discussions with the Department of Justice with a view toward potential resolution of civil claims", and had taken as a provision because negotiations had "developed" during the last quarter, the lender said in a news release Friday.

In mid morning trading, HSBC shares topped the FTSE 100 fallers list, down 3% t0 700p.

HSBC unexpectedly set aside $897 million related to a USA investigation into the historic sale of toxic US mortgage bonds.

The bank made over 75 percent of its profits in Asia in 2017.

Revenue increased 6 per cent to US$13.7 billion, driven by higher deposit margins, growth in retail banking, wealth management and commercial banking in Asia.

HSBC Holdings' US$2 billion stock buy-back plan, the only one planned in 2018, failed to impress investors after Europe's biggest bank delivered first-quarter financial results that were largely in line with expectations.

"This has enabled us to announce a further share buyback,"he said".

HSBC said the reason for the fall was due to a 13% increase in operating expenses compared to a year ago, related to the retail banking business in the United Kingdom and China.

The bank's profit shrank mainly as a almost 13 per cent rise in operating expenses outpaced revenue growth of 5.5 per cent. HSBC said the rise in costs was due to investment in its retail banking businesses in its core markets of Britain and China. Cross-town rival Standard Chartered reported this week that it was on track to hit a target of 8 per cent return on equity in the medium term. Mark Tucker, the former head of insurer AIA, became the chairman of HSBC in October, taking over from Douglas Flint.

He succeeded on the last front, bucking a six-year decline in annual revenues, but was also forced to disclose that HSBC faced at least $1.5 billionn in penalties over alleged tax evasion and money laundering connected to its Swiss private bank - a sign that such troubles will fall to another generation of leaders. The profit in the latest quarter was below the $5.76 billion average of analysts' estimates compiled by the bank.

Rising interest rates helped the bank generate more profit from a large base of deposits after years of low rates in the United States pushed down margins.

"We continue to benefit from interest rate rises and economic growth, particularly in Asia", Flint said.



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