HSBC Q3 profit jumps, unveils $1bn buyback

HSBC announced a share buyback of up to $1 billion to be completed by the end of this year alongside the release of its third-quarter results. The London-based bank said this is its second consecutive quarterly buyback after resuming stock repurchases over the summer. The new programme comes in addition to a third interim dividend of $0.10 per share, which is unchanged from the previous quarter.

Shares in HSBC (0005.HK) rose 0.63% in Hong Kong after the announcement. The buyback follows the earlier halt of a previous repurchase programme in the wake of HSBC’s $14 billion takeover of Hang Seng Bank. The latest capital return signals continued willingness by the bank to distribute surplus capital to shareholders while maintaining its investment and growth plans.

For the July–September quarter, HSBC reported profit before tax of $9.6 billion, a 32% increase from a year earlier. Pretax profit was broadly in line with consensus expectations compiled by the bank, which stood between $9.63 billion and $9.69 billion. The increase in profit reflected the absence of $1.4 billion in legal provisions that had been recorded in the same period last year, as well as higher revenue and lower credit losses.

Expected credit losses fell 17% year on year to $800 million in the quarter. The decline was supported by a reduction in charges linked to Hong Kong’s real estate sector and to the bank’s wealth businesses in the UK and Mexico. These lower impairment charges contributed to the overall improvement in profitability alongside revenue growth.

HSBC’s revenue for the third quarter rose to $18.6 billion from $17.8 billion a year earlier. This figure was slightly below the consensus estimate of $18.93 billion compiled by the bank, but still represented solid year-on-year growth. Net interest income increased to $9.3 billion, supported by deposit growth and higher yields from reinvestments in the bank’s structural portfolio as interest rates remained elevated.

Alongside higher net interest income, HSBC reported increased fee income from its corporate and institutional banking and wealth businesses. These areas helped to diversify revenue beyond interest income, contributing to the overall rise in quarterly revenue. Together, the different revenue streams underpinned the bank’s ability to grow profits even as it managed credit and cost pressures.

Operating expenses decreased 12% year on year to $8.8 billion in the third quarter, largely because legal provisions booked a year earlier did not recur. Excluding such notable items, underlying expenses increased amid inflation and higher spending on technology. The bank said it remains on track to deliver operating expense growth of approximately 1% in 2026 on a target basis.

Looking ahead, HSBC expects revenue to grow annually through 2028. It is targeting 5% revenue growth in 2028 compared with 2027, excluding notable items and on a constant currency basis. The bank cautioned that strong business performance could lead to additional performance-related pay and modestly higher cost growth, but it continues to guide toward disciplined expense control while investing in technology and growth initiatives.