Buoyant HSBC returns £1.5bn to investors

HSBC will return £1.5bn to shareholders after profits rocketed and bosses said it was over the worst of the pandemic.

The FTSE100 bank made £3.9bn of profit in the third quarter, a jump of 74pc from the same period of last year.

HSBC has benefited from the global economy’s rebound from the pandemic and from a frenzied housing market in the UK, which helped its mortgage business.

But the profit surge was driven in large part by the release of £508m that the bank had previously set aside to cover bad loans, which many worried would spike during Covid-19.

Analysts said this ‘flattered’ its results. HSBC also launched a £1.5bn share buyback after the City was left disappointed by a lower-than-expected half-year dividend – of 402p per share – the bank announced in August.

Chief executive Noel Quinn said that while the company is still ‘cautious’, the ‘lows of recent quarters are behind us’.

The company also shrugged off concerns about property problems in China, where one of the biggest companies, Evergrande Group, has teetered on the brink of collapse and stoked fears that it could lead to a wave of defaults.

HSBC has around £14.4bn invested in the country’s property market. Quinn’s key strategy since he took up the top job last year has been to focus on Asia – sending executives to the region and ploughing in resources.

The bank already makes around 60pc of its profits there.

But it said it had seen growth in every region it worked in and that it could benefit from rising interest weeks.

In the UK, rates are expected to rise as soon as next week.

Richard Hunter, head of markets at online investment service Interactive Investor, said: ‘The numbers are flattered by further bad debt releases, in what will likely be the theme of the season, but the announcement of a share buyback programme is a positive endorsement of the bank’s own confidence in prospects.’

HSBC’s results come on the heels of Barclays’ strong quarterly results released last Thursday.

Barclays’ profits doubled amid a strong performance from its investment bank advisory business. ÷ AN AUDACIOUS attempt by the Co-operative Bank to take over High Street rival TSB fell on deaf ears.

The bank confirmed it sent a letter to TSB’s owner, Banco de Sabadell, expressing interest in buying.

But the Co-op said its letter had not led to any discussions with the Spanish banking giant.