HSBC shares jumped by more than three per cent this morning as the company unveiled a rise in profits and revenue during the six months to 30 June.
The bank also announced plans for a $2bn (£1.52bn) share buyback programme, bringing the total stock it has pledged to buy back in the past year to $5.5bn.
This is how the City has been reacting to the news:
Sweetening the deal
Connor Campbell, financial analyst at Spreadex, said while the share buyback was at the lower end of estimates, it was "still enough of a sweetener to send the stock to its highest price since the financial crisis".
Cheering up the market
"HSBC did most of the heavy lifting on the FTSE this morning, with the stock’s three per cent rise delivering the bulk of the gains for the index," said Neil Wilson, senior market analyst at ETX Capital.
"Pre-tax profits rose five per cent to more than $10bn, but it was the fresh $2bn buyback that cheered the market more than anything else. It’s committed to repurchasing $5.5bn now. HSBC shares are now up more than 80 per cent from last year’s low.
"HSBC is upbeat on the global economic outlook but a little more cautious about the UK, from which it is still very well insulated of course. It notes today that the UK is showing signs of slower growth as ‘inflationary impacts of a weaker currency, Bank of England caution over consumer indebtedness and uncertainties over the EU exit negotiations constrain consumer and business confidence and spending’."
"HSBC has had a good start to the year, helped by rising revenues, falling costs and fewer bad debts. The market has reacted positively, mainly because it likes the smell of $2bn of cash heading back to investors from a share buyback scheme taking place in the second half of this year," said Laith Khalaf, senior analyst at Hargreaves Lansdown.
"Following a spectacular rise in its share price over the last year, HSBC now accounts for around six per cent of the UK stock market, so almost anyone in the country with a pension has an interest in how the bank performs."
Khalaf added a note of caution regarding the share buyback plan: "In theory a share buyback scheme represents a less risky way for companies to return cash to shareholders because it’s a one-off bonus, rather than a regular payment like an ordinary dividend, and so doesn’t have to be maintained to the same degree. However, markets can still get addicted to these schemes, with the associated withdrawal symptoms if they are taken away."