HSBC $2bn share buyback likely to be only one in 2018

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"Our primary focus is to grow the businesses safely, and we have increased investment to deliver that aim", Chief Executive John Flint said in a statement.

"We've got strong progression in terms of revenue across our four global businesses", he said.

The surprise dip sent its Hong Kong shares down around 2.5pc on Friday morning United Kingdom time.

HSBC unexpectedly set aside $897 million related to a USA investigation into the historic sale of toxic US mortgage bonds.

HSBC is Europe's biggest bank, but earns most of its profits from Asia.

The group meanwhile announced that it meant to initiate e a share buyback of up to $2 billion, while cautioning that it expects this to be the only share buyback for the current year, "in light of the growth opportunities that we now see".

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HSBC said the reason for the fall was due to a 13% increase in operating expenses compared to a year ago, related to the retail banking business in the United Kingdom and China. Such buybacks boosted investor confidence in the bank last year, pushing up its share price from the five-year low it hit in April 2016.

It also said revenue rose six percent to 13.7 billion in the period as it benefits from an improving global economy and rising interest rates. Cross-town rival Standard Chartered reported this week that it was on track to hit a target of 8 per cent return on equity in the medium term. However, achieving a 10% return for 2018 "looks hard", Finance Director Iain Mackay said on a call with reporters.

"Even so, over the last year the shares have added 12%, as compared to a 3.7% jump for the wider FTSE100, and over two years the 62% rise is reflective of a bank whose fortunes have largely recovered". The profit in the latest quarter was below the $5.76 billion average of analysts' estimates compiled by the bank. Profit also fell at the corporate centre, reflecting a hit to revenue from repositioning its bond holdings to anticipate higher interest rates and a one-off charge for revaluing some assets under new accounting rules for financial instruments.

HSBC's best regional performance came once again came from Asia, and Hong Kong in particular, where it's redeploying as much as $100 billion of capital.

Revenues remained strong at the start of the year, with adjusted revenues coming in at $13.9 billion, 3 per cent higher than a year ago, hitting analyst projections.

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