British bank HSBC (NYSE:HSBC) has reported third quarter earnings that beat expectations and announced plans for a share buyback of up to $2 billion U.S.
The bank’s pre-tax profit for the third quarter jumped 76% from a year earlier to $5.4 billion U.S. Analysts had expected a 23% year-over-year increase in pre-tax profit to $3.78 billion U.S.
HSBC said it released around $700 million of cash reserves that was previously set aside to prepare for a rise in loan losses as the global economy was weighed down by the pandemic. All regions the bank operates in were profitable during the quarter, said HSBC.
The bank’s revenue for the third quarter was $12 billion U.S., 0.7% higher than a year ago. Analysts had expected a 3.1% annual increase in revenue to $12.3 billion U.S. Also, net interest margin, a measure of lending profitability, was 1.19% compared with 1.2% in the second quarter of this year.
Earnings per share was 18 cents, compared with 17 cents in the second quarter and seven cents in the third quarter of 2020.
HSBC did not announce any dividends for the third quarter. But the bank said it plans to start a share buyback of up to $2 billion U.S.
HSBC also said in its earnings release that it has no direct credit exposure to Chinese developers in the "red" category and limited exposure to those in the “orange” category.
The bank was referring to the Chinese government’s "three red lines" policy that was rolled out to limit a company’s debt in relation to its cash flows, assets and capital levels.
