HSBC posts better-than-expected Q4 profit, plans $2bn of share buybacks

(Sharecast News) - HSBC Holdings beat analysts' profit estimates and unveiled a fresh share buyback programme. Reported revenues fell by 11% during the fourth quarter to reach $11.6bn, with the lender citing the recycling of FX losses and other reserves related to the divestment of its Argentine unit as the causes of that.

Reported profit before tax meanwhile was ahead by $1.3bn to $2.3bn or by $0.4bn to $0.6bn on an after tax basis.

Commenting on HSBC's results, chief executive officer Georges Elhedery said that the group's "strong" full-year performance set the stage for future growth.

"We are creating a simple, more agile, focused bank built on our core strengths. We continue to take deliberate and decisive steps," he added.

In constant currency terms, and excluding notable items, HSBC's topline grew by $1.2bn to $16.5bn during the quarter on a reported basis.

As regards the global economic outlook, HSBC said that it was still uncertain, with possible downside risks from trade frictions and supply disruptions.

Management reiterated a previous forecast for a return on tangible equity in the mid teens for each of the three years between 2025 and 2027, when excluding notable items.

But in a research note sent to clients, analysts at RBC Capital Markets noted how consensus was for a 14% return.

Hence RBC's expectation that the medium-term RoTE guidance would be in focus during HSBC's conference call, according to Dow Jones Newswires.

For their part, analysts at Keefe, Bruyette & Woods labelled HSBC's fourth quarter figures as "respectable".

The lender also announced that it was planning to start a share buyback programme of as much as $2.0bn.

But KBW said that felt "light" in comparison to the recent $3bn run rate, although the proposed dividend was "slightly better".

They also took aim at the premium valuation, arguing that "to say that Asia/Hong Kong is the same opportunity as it was 15 year ago is obviously flawed."

As of 0902 BST, shares of HSBC were off by 1.10% at 880.20p, having earlier briefly traded in the black.