HSBC Holdings Plc's announcement of a $2 billion share buyback wasn't enough to placate investors, who sent the stock tumbling after the bank reported costs rose at a faster pace than revenue in the first quarter.
Reported operating expenses climbed 13 per cent year-on-year to $9.4bn, thanks to costs related to the bank's expansion and the provision for the expected United States settlement.
Friday's results underwhelmed investors and HSBC shares fell 2.5 per cent in early London trading to 703.7p. "We are investing to grow revenue further".
The banking giant also said it is planning a share buyback of up to $2 billion - the only one it said it expects to conduct this year.
"We also made strategic hires in our securities joint venture in mainland China, and invested to enhance our digital capabilities in all our global businesses".
Adjusted pretax profit at the bank's global private banking unit increased 53 percent to $113 million from $74 million for the corresponding period in 2017.
Revenue increased 6 per cent to US$13.7 billion, driven by higher deposit margins, growth in retail banking, wealth management and commercial banking in Asia. Mr Flint said the 8 per cent rise in underlying quarterly costs reflected investments in its Chinese and United Kingdom retail banking operations, its Chinese securities joint venture and digital improvements across the group.
HSBC said it has a strong capital base, with its common equity tier 1 ratio standing at 14.5% at the end of March, flat from the end of 2017. However, achieving a 10% return for 2018 "looks hard", Finance Director Iain Mackay said on a call with reporters.
The bank has announced four buy-backs since 2016, buying a combined US$5.5 billion of shares in the previous three occasions. The profit in the latest quarter was below the US$5.76 billion average of analysts' estimates compiled by the bank. "So, pretty happy with where we started off the year". "The Hong Kong dollar is now at the weak end of the peg [to the United States dollar] so it's possible that we'll have a more sustained rise in Hibor rates soon", Mr Flint said.
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.