HSBC Shareholders to Receive $4.8bn Amid Profit Surge

HSBC shareholders are set to receive an additional $4.8bn as the bank reports a significant rise in profits, reflecting its strong financial performance.

HSBC has decided to sprinkle a generous $4.8 billion into the pockets of its shareholders, a final farewell gift from the departing chief executive, Noel Quinn, following a modest uptick in second-quarter profits. The London-based banking giant announced plans to repurchase an additional $3 billion (£2.3 billion) in shares from investors, who will also enjoy a fresh infusion of $1.8 billion in dividends.

These payouts come on the heels of HSBC's ability to scrape together a 1.5% increase in pre-tax profit, reaching $8.9 billion in the second quarter, a slight rise from $8.7 billion a year prior. The bank, which predominantly garners its profits from the Asian market, has seen a boost from its wealth division and a growing appetite for investment banking services. This growth has somewhat cushioned the blow of an 11% decline in net interest income, particularly in the UK, where fierce competition for customers has compelled banks to offer higher returns to savers and more enticing mortgage rates to lure in business.

Net interest income, the lifeblood of banking, represents the chasm between what banks pay to savers and what they charge borrowers. In a somewhat optimistic twist, HSBC has raised its full-year forecast for net interest income from $41 billion to $43 billion, contingent upon the unpredictable trajectory of global interest rates.

While the bank prudently set aside $346 million for potential defaults, this figure pales in comparison to the $913 million reserved last year, which included provisions for bad debts tied to the tumultuous downturn of China’s property market.

In a parallel narrative, the UK high street challenger, Metro Bank, unveiled its earnings on Wednesday, revealing a pre-tax loss of £33.5 million for the first half of the year, a stark contrast to the £15.4 million profit reported a year earlier. This downturn coincided with a 22% drop in net interest income, as the bank found itself compelled to offer more attractive rates to savers following a campaign to boost deposits at the end of the previous year.

Metro Bank had been scrambling to recover from a cash outflow last autumn, triggered by market jitters regarding its balance sheet, which necessitated a £925 million rescue deal, leaving the bank 53% owned by Colombian billionaire Jaime Gilinski Bacal. However, in a surprising twist of fate, Metro’s shares surged over 32% on Wednesday morning, as investors rallied behind a turnaround plan that the bank claims will restore profitability by the fourth quarter of this year. This marks the largest single-day gain for Metro Bank shares, which climbed to 57.2p, reaching their highest point since the October crisis.