HSBC plans to buy back up to US$2 billion in shares, beats estimates with higher pre-tax profit
- Hong Kong’s biggest currency-issuing bank said it remains ‘comfortable’ with its exposure to China Evergrande Group and other mainland developers
- Pre-tax profit was US$5.4 billion, beating a consensus estimate of US$3.78 billion
CEO Noel Quinn said the lender remains “comfortable” with its exposure to the real estate sector in China, even as Evergrande, the mainland’s largest home builder by sales, missed several interest payments on its offshore debt in September and October and other developers have defaulted on their debt recently.
Quinn said HSBC, which is based in London, but generates much of its revenue in Asia, typically finances properties in tier 1 cities in China, with good overall security on the loans. The bank’s total exposure to the real estate sector in the mainland is less than US$20 billion.
“Clearly, the sector is going through adjustment and there are risks of that adjustment, but we think they’re manageable, particularly from a HSBC perspective,” Quinn said in a conference call with journalists.
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In the third quarter, the lender’s pre-tax profit was US$5.4 billion, beating a consensus estimate of US$3.78 billion by analysts compiled by the bank, and an improvement over the US$3.07 billion it reported a year earlier. On a net basis, HSBC earned a profit of US$3.54 billion in the third quarter, compared with a profit of US$1.36 billion a year ago.