HSBC's $ 2bn buyback isn't enough to regain investor confidence

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HSBC Holdings' new chief executive sought to cheer investors with a share buyback of up to $2 billion, even as the bank reported an unexpected 4% drop in first-quarter pre-tax profit due to a surge in investments.

The global bank, which is listed in London and Hong Kong, reported 6pc growth in revenues to $13.7bn in the three months to March amid higher deposits for its retail banking and wealth management arms.

Mr Flint said that in the first quarter HSBC "increased investment in retail banking and wealth management to further grow our market share in the United Kingdom and mainland China".

Analysts had previously expected the bank to report a pre-tax profit of $5.7bn.

"This has enabled us to announce a further share buyback", he said.

North, South Korea women's TT teams unite
South Korea's Suh Hyo-won (left) and North Korea's Kim Nam-hae play an exhibition game in Halmstad, Sweden on Thursday. The South Korean players are: Jeon Ji-hee, Kim Ji-ho, Suh Hyo-won, Yang Ha-eun and Yoo Eun-chong.

More generally, with much of the growth coming from HSBC's wealth management, commercial and retail banking in Asia, the decision to focus on that region appears to be paying off. Earnings per share were $0.15, lower than $0.16 a year ago.

The results are the first announced since John Flint took over as chief executive from Stuart Gulliver, with the newcomer stressing he will get the bank back on track after a series of scandals including HSBC's involvement in laundering money for Mexican drug cartels.

Flint plans to double down on HSBC's "pivot" to Asia and China in particular, despite some setbacks in the plan launched in June 2015.

Overall the group saw lending growth of US$17bn in the first quarter, increasing net loans and advances to customers by 2% in the quarter, while it maintained a strong capital base with a common equity tier 1 ('CET1) ratio of 14.5%. Revenue increased by nearly 6 percent, to $13.7 billion. "We intend to deliver positive adjusted jaws for 2018". In 1Q18, we increased investment in Retail Banking and Wealth Management to further grow our market share in the United Kingdom and mainland China.

Retail Banking and Wealth Management segment's adjusted profit before tax was 5 percent higher and adjusted revenue grew 9 percent from previous year to $5.67 billion, 8 percent growth in both subdivisions.