HSBC has unveiled plans for a $1bn share buyback even as its third-quarter revenues fell short of market expectations, with banking net interest income and its wealth division both underperforming forecasts. Shares dropped seven per cent in early trading to 1,269.0p, putting the bank at risk of losing its position as the largest listed company by market capitalisation.
Revenue shortfall and profit in line
The FTSE 100 lender reported a $9.63bn profit for the quarter, broadly in line with the consensus estimate of $9.69bn. However, revenues came in at $18.6bn, beneath the $18.9bn forecast, a shortfall of over $300m driven largely by weaker-than-expected banking net interest income of $11.6bn, around $247m below projections.
The wealth division also missed expectations, generating $2.7bn in revenue against a consensus forecast of $2.8bn.
Returns to shareholders
The bank confirmed it would return $1bn to shareholders via the buyback programme. It also declared an interim dividend of $0.1 per ordinary share, equivalent to approximately $1.7bn being distributed to investors. Combined with the buyback, total returns for the quarter could reach around $2.7bn.
Operating costs fell 12 per cent to $8.8bn, largely owing to the absence of a legal charge that had inflated the previous year's figures.
Madoff case and Hang Seng acquisition
HSBC set aside a $1.1bn provision in its third-quarter results in 2025 after a Luxembourg court dismissed the bank's appeal concerning an investment fraud case linked to the Bernie Madoff scandal. The legal action centred on allegations that the bank had failed in its supervisory responsibilities by neglecting to adequately protect or confirm the existence of assets, thereby enabling the fraud to continue.
Just over a year ago, the bank announced plans to acquire the remaining minority shareholding in Hong Kong's Hang Seng Bank. The group paid a 30.3 per cent premium on the transaction, stating it would be financed by suspending its buyback programmes, with a resumption of buybacks pledged for August following a strong second-quarter profit surge.
Budget tax expectations
The announcement from HSBC, Europe's largest lender by market capitalisation, arrives just before Chancellor John Healey delivers his first Budget, in which banks are widely anticipated to face a significant tax crackdown. Healey has faced pressure from Labour's left wing and trade unions to impose steeper taxes on the sector after the industry recorded substantial profits this year. A five per cent increase to the UK banking surcharge, levied in addition to corporation tax, is anticipated to generate approximately £2bn annually.
