Said HSBC Holdings PLC Monday that earnings rose 5% during the six months of June and announced its third repurchase for a year, indicating continued progress on the six-year recovery plan of Europe’s largest bank.
HSBC, like many global banks, spent years in the 2008 financial crisis by expanding its empire with a series of acquisitions. Recent years have seen reduced employment and the sale of assets around the world to reduce the group to profitability and keep dividend payments tight.
Bank CEO Stuart Gulliver and President Douglas Flint retire, leaving a legacy of improving revenue and returning more capital to shareholders, focusing on cutting the bank’s empire and targeting Asia.
The latest stock repurchase of up to 2 billion, occurs when HSBC uses the excess capital to offset the dilution effect of dividend paid shares. A previously announced $ 1 billion repurchase was completed in April.
“The return on equity is because the company is very rewarding, very profitable … the dividend is 51 cents for the foreseeable future,” Finance Director HSBC Iain Mackay said Monday.
The takeover, once completed, will amount to the buyback of HSBC shares from the second half of 2016 to 5.5 billion dollars.
Listed shares of Hong Kong Hong Kong Stock Exchange rose to 3 percent after the announcements, which has increased revenues by about 1 percent in morning trading, while the overall market was trading 1 percent.
“Over the past 12 months we have paid more dividends than any other European or American bank and spent $ 3.5 billion on shareholders by repurchasing shares,” Gulliver said.
HSBC has maintained its dividend payout ratio higher than many competitors in recent years, including last year, as a slowdown in banks’ earnings growth has led rivals such as Standard Chartered PLC to remember payments.
HSBC dividends amounted to $ 10.1 billion in 2016, 10 billion in 2015 and 9.6 billion in 2014.
For the half year through June, pre-tax earnings amounted to $ 10.2 billion, compared with $ 9.7 billion for the same period last year, compared with the average estimate of 9.5 billion extracted from analysts Consulted by the bank.
The bank also said its equity capital ratio of 1 to 1 measure of financial strength – was 14.7 percent at the end of June, up 14.3 percent three months earlier and a 12.1 percent early of this year.
The ratio is expected to rise as the bank repatriates about $ 8 billion at its US subsidiary, following last year’s approval by the US Federal Reserve.
The bank, which accounts for more than half of its earnings in Asia – most of Hong Kong and China – said pre-tax earnings in Asia rose 7% in the first half to $ 7.6 billion, due Mainly to asset management and Hong Kong insurance income.
HSBC obtained approval last month from China to create a joint investment banking joint venture with a state-backed fund, ending a 20-month wait, making it the first company of its kind in China to be Majority ownership of a foreign bank.
The company will enable HSBC to grow in the second world economy, and is at the heart of its ambition to increase profits from the pearls of the fast-growing river delta region.