(Bloomberg) -- HSBC Holdings Plc second-quarter profit beat analysts' estimates as outgoing Chief Executive Officer Stuart Gulliver boosted revenue while also trimming costs, and the lender said it will spend up to $2 billion buying back stock.
Adjusted pretax profit rose to $6 billion from $5.36 billion a year earlier, Europe's largest bank said in a filing Monday. That compared with the $5.5 billion average estimate of five analysts compiled by Bloomberg. Revenue rose 4 percent to $13.2 billion, also beating analyst forecasts.
“We have had an excellent first half of 2017,” Gulliver said in the statement. “We remain on track to complete the majority of our strategic actions by the end of the year.”
The new buybacks, to be completed by December, will add to the $3.5 billion of repurchases since last year that have helped push the lender's stock up more than 50 percent in the past 12 months. Gulliver's attempt to turn around the bank in the wake of scandals and financial fines has been stymied by a failure to boost revenue. Rising interest rates around the world are now making that task easier.
Chief Financial Officer Iain Mackay has previously said as much as $8 billion could be repatriated from its U.S. operations and a portion of this would be allocated to buybacks. HSBC's North American unit passed a Federal Reserve stress test in June, clearing the way for more than $3 billion of capital to be returned to shareholders, analysts said at the time.
Here are other key second-quarter figures reported by HSBC:
- Reported pretax profit climbed 46% to $5.3 billion from year earlier
- Costs dropped 3% to $7.4 billion
- Common equity Tier 1 ratio 14.7% versus 12.1%
- Average 1st-half return on shareholders equity 8.8% versus 7.4%
- 1st-half dividend 20 U.S. cents unchanged from year earlier
Gulliver is seeking to jump-start growth after five years of declining revenues and several costly misconduct scandals. He has spent most of his tenure attempting to improve profitability by shrinking HSBC's vast global network, exiting almost 100 businesses and 18 countries.
The bank's incoming Chairman Mark Tucker, who succeeds Douglas Flint in October, is already considering internal and external candidates to replace Gulliver, who is due to retire next year, a person familiar with the matter said earlier this month.
To contact the reporters on this story: Stephen Morris in London at smorris39@bloomberg.net, Alfred Liu in Hong Kong at aliu226@bloomberg.net.
To contact the editors responsible for this story: Michael J. Moore at mmoore55@bloomberg.net, Darren Boey, Sree Vidya Bhaktavatsalam
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