HSBC (HSBA.L) on Monday reported a fresh $3 billion share buyback and a more than doubling of third-quarter profit that nonetheless missed forecasts as spending on technology and operations grew and inflation pushed wage expectations higher.
The results from Europe’s biggest bank showed the pressure it is under to deliver returns to long-suffering investors now that interest rates worldwide are rising.
HSBC indicated costs are likely to increase by up to 5% this year excluding an acquisition, more than its previous goal of a 3% rise, as technology and operating spending grows and it considers a boost to staff bonuses in the fourth quarter.
The bank posted a pre-tax profit of $7.7 billion for the July to September quarter, versus $3.2 billion a year earlier, but the result trailed the $8.1 billion mean average estimate of brokers compiled by HSBC.
HSBC’s profit was below expectations and “costs are likely to be the area of controversy”, said London-based Jefferies analyst Joe Dickerson, though he added the share buyback was $1 billion larger than his forecast.
The London-headquartered bank with a market value of $118.6 billion said it aimed to complete the share buyback by next February, lifting the total buybacks announced this year to $7 billion.
It also dished out the third interim dividend payout this year of 10 cents per share, bringing the total payout this year to 30 cents per share.