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News Worms


HSBC announces £1.5bn share buy-back amid half-year profits rise

HSBC announces £1.5bn share buy-back amid half-year profits rise

HSBC was widely expected to announce that it will buy back its own shares at between $1.5 billion to $4 billion in the second half of 2017, market watchers said.

Reported pre-tax profit for the six months to June rose five percent to $10.2 billion compared with $9.7 billion for the same period previous year.

Mr Gulliver has overseen stringent job cuts and asset sales as part of efforts to boost profits, and on Monday said the bank is on track to achieve around six billion U.S. dollars cost savings by the end of the year.

HSBC has previously said it could relocate up to 1,000 staff to Paris to conduct European Union business it may not be allowed to do from London in the event of a "hard Brexit". 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.

The payday for shareholders comes after a $1 billion shares buyback in February and $2.5 billion a year ago as part of the global bank's drive to prune its sprawling empire and to improve its share price.

HSBC is the largest bank in Europe and presents an opportunity for investors to diversify away from banks that are more heavily weighted in North American markets.

"We see this as a solid set of results, but would expect a somewhat muted share price reaction: the strong recent performance of the shares suggests to us that today's solid print is likely already reflected in the price", Goldman said.

Since the 2008 credit crunch HSBC has cut thousands of roles and sold assets to ensure it can keep paying dividends and remain profitable.

HSBC is one of a number of banks considering relocating jobs to the continent after the Brexit vote, having said that 1,000 jobs may have to move from London to Paris over the next two years depending on the outcome of negotiations. The stock buyback plan for 2017 shall raise the amount of total stock it has pledged to buy over the past year to $5.5bn.

For example, the Bank of England has estimated a single basis-point increase that might result from splitting the clearing of interest-rate swaps could cost firms across the euro zone €22 billion a year, according to a June 27 report. Mr. Flint is leaving in September and will be replaced by Mark Tucker, former CEO of AIA Group Ltd. Mr. Gulliver has said he would leave next year after a new CEO is named.

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