Amidst an ongoing pivot to Asia, HSBC delivered a sound set of results in the latest quarter. Image Credit: Bloomberg

London: HSBC Holdings boosted its plans to return billions of dollars to investors, saying that business is picking up as global economies recover from the pandemic. The bank will initiate a share buyback of as much as $1 billion, on top of an earlier $2 billion programme, it said in an earnings statement on Tuesday.

The lender posted a 79 per cent increase in adjusted pretax profit to about $4 billion in the fourth quarter, compared with company-compiled estimates of $4.09 billion. "We have good momentum coming into 2022 and are confident that we can continue to execute against our strategy," CEO Noel Quinn said in the statement. "We also remain cognisant of the potential impact that further COVID-19-related uncertainty and continued inflation might have on us and our clients."

HSBC follows other global banks in boosting shareholder returns as rising interest rates buoy lending income. At the same time, the economic outlook is being clouded by factors including geopolitical tensions, inflation, and lingering effects of the pandemic including in HSBC's key market of Hong Kong.

A second buyback
Shares in HSBC are up about 22% so far this year, buoyed by hopes that higher rates will mean greater profits. It will also pay a second-interim dividend of $0.18 per share. The latest buyback will start after an earlier programme announced in October to repurchase $2 billion of shares has concluded.

Slower start in Asia

Quinn warned in the earnings statement that although the lender carries "good business momentum" in 2022, it expects a weaker wealth performance in Asia for the first quarter of this year. A year ago, HSBC unveiled a strategic refresh with its pivot to Asia.

The strategy is focused on managing more and more of the wealth of Asia's growing ranks of millionaires and billionaires, as well as the region's mass affluent. The plan involves an investment of $6 billion across Asia, targeting wealth, commercial banking and markets.

As part of its Asian expansion plans, the bank has been pursuing a series of bolt-on acquisitions. HSBC has already bought AXA Singapore for $575 million, as well as the investment management unit of India's L&T Finance Holdings Ltd for $425 million. The company said in August it was eyeing three or four deals of about $500 million each.

The past years have been dominated by repeated restructurings that have included the cutting of 35,000 jobs, the relocation of senior executives from London to Hong Kong, and most recently coping with the fallout from the  pandemic.

HSBC has been pointing to a brighter outlook in recent months. In October, Chief Financial Officer Ewen Stevenson said the bank's revenues were at an inflection point, saying that central bank rate increases would provide a "material kicker" to the lender's performance.