Profit and Buyback Show HSBC Progressing

HONG KONG HSBC said profits were up Monday in the first half of the year in what it called an “excellent” result after a turbulent 2016

The bank said second-quarter net profit jumped by more than half to $3.87 billion as revenues grew faster than expenses.

Reported pre-tax profit for the six months to June rose 5% to $10.2bn compared with $9.7bn for the same period in 2016.

HSBC said it had seen a seven per cent increase in revenue from transaction banking products, although overall revenue of $26.2bn was 11 per cent lower "primarily due to currency translation differences, the absence of fair value movements on our own debt and revenue from the operations in Brazil that we sold". It completed a share buyback of $1 billion during in April.

The latest share buyback lifts the total buybacks by the bank the this year to $5.5 billion. The revamp he and Chairman Douglas Flint started in 2011 involved exiting dozens of businesses and swaths of the world, and marked a U-turn for HSBC after a stint of unbridled growth.

Mr Gulliver and Mr Flint are both retiring, leaving a legacy of improving revenue and returning more capital to shareholders, having focused on trimming the bank's empire and shifting its focus eastwards.

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The most recent buyback of shares of as much as $2 billion has come as the bank uses additional capital to offset a dilutive effect on shares paid out in the form of dividends. He has spent most of his tenure attempting to improve profitability by shrinking HSBC's vast global network, exiting nearly 100 businesses and 18 countries. Interested investors should note that this latest move takes the amount of buy-backs pledged since the second half of 2016 to $5.5bn.

Laith Khalaf, senior analyst at Hargreaves Lansdown, said: "The market has reacted positively, mainly because it likes the smell of two billion United States dollars of cash heading back to investors from a share buy-back scheme taking place in the second half of this year".

The estimate, one of the most detailed yet by a major bank, includes the costs of relocating up to 1,000 jobs to the French capital as well as associated legal fees, Gulliver said.

London's financial executives have warned of the dire consequences for jobs and investment of a "cliff-edge" Brexit, in which no mutual free trade deal is struck before the two-year renegotiation period ends. The shares have risen from £4.82 to £7.71 over the last 12 months.

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