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LONDON (Alliance News) - HSBC Holdings PLC on Wednesday said it will buy back USD2.50 billion in shares in the second half of 2016 following the sale of its Brazil business, as first half pretax profit and revenue both declined.
The FTSE 100 group, one of the largest banks in the world, said it would buy back USD2.50 billion in shares in the second half after it completed the USD5.2 billion sale of its business in Brazil to Banco Bradesco SA. The sale was part of a wider push by HSBC to restructure its operations globally, including exiting from a number of countries, and to reduce the complexity of the business.
HSBC also committed to maintaining its dividend at its current level for the remainder of the year. It declared an interim dividend of 0.31 US cents per share.
The buyback was announced as HSBC said reported pretax profit for the half to the end of June was USD9.71 billion, down from USD13.63 billion a year earlier. Adjusted pretax profit, in constant currencies and stripping out one-off items, fell to USD10.80 billion from USD12.55 billion a year prior.
HSBC said costs continued to fall in the first half, with USD2.0 billion run-rate savings achieved since it started its cost cutting programme for the business. Risk-weighted assets also continued to reduce in the first half, falling to USD1.08 trillion from USD1.10 trillion at the end of December.
Adjusted revenue in the first half fell 4.0% year-on-year to USD27.89 billion, down 7% for its Global Banking & Markets and Balance Sheet Management arms and by 6% for its Retail Banking & Wealth Management unit.
HSBC said its common equity tier one ratio, a key measure of a bank's profitability and its ability to pay dividends, was 12.1% at the end of June, compared to 11.9% at the end of December.
"We performed reasonably well in the first half of the year in the face of considerable uncertainty. Profits were down against a strong first half of 2015, but our diversified, universal banking business model helped to drive growth in a number of areas," said Chief Executive Stuart Gulliver.
"While the economic environment remains difficult, the action we have taken has already put us in a far better position for when normal conditions return. HSBC is stronger, leaner and better connected than it was last June. There is much still to do, but we are making progress in all the areas within our control. In the meantime, our balanced and diversified business model, strong liquidity and strict cost management make us highly resilient," Gulliver added.
By Sam Unsted; samunsted@alliancenews.com; @SamUAtAlliance
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