HSBC posts surprise 74% jump in profit, $2.7 billion buyback

SINGAPORE/LONDON (REUTERS) – HSBC Holdings reported a 74 per cent rise in third quarter profit, beating market expectations, as the Asia-focused bank released cash set aside for expected bad loans that have not materialised.

The bank posted pre-tax profit of US$5.4 billion (S$7.28 billion) for the quarter to September, versus US$3.1 billion a year earlier and the US$3.78 billion average estimate of 14 analysts compiled by HSBC.

HSBC also announced a share buyback of up to US$2 billion (S$2.7 billion) as it continues to return excess capital to shareholders in place of investing the cash in its businesses.

HSBC released US$700 million in cash it had put aside in case pandemic-related bad loans spiked, as opposed to the same time a year ago when it took an US$800 million charge in expectation of soured debts.

In reality, economic conditions have improved while loans have performed better than expected, the bank said.

The results from the London-headquartered bank come as rivals such as Citigroup are riding a boom in mergers and acquisitions, while fending off weakness in the lending business.

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