HSBC Holdings releases its annual results this week and many investment houses seem positive.
Goldman Sachs expects the total amount of share buybacks of the banking group to hit US$3 billion (HK$23.4 billion) this year and the dividend payout to be maintained at 51 US cents per share.
The conglomerate has had three public repurchases in the past, ranging from US$1 billion to US$2.5 billion.
It will record a US$3.7 billion profit before tax for the fourth quarter of the last financial year while the average market expectation is US$3.9 billion, up 49 percent from its result last year, Goldman Sachs added.
Investors will tend to focus on the company’s retail business performance in Hong Kong in the fourth quarter last year when the local stock market surged and the interest rate grew, both of which should have benefited the HSBC’s wealth management and insurance business, Goldman Sachs said.
According to the prediction made by analysts from Bloomberg, the company should see approximately US$20.35 billion annual adjusted profit before tax, growing 5.4 percent year on year. Internal securities and analysts from HSBC are more positive, forecasting a 10.4 percent annual growth in adjusted profit before tax to US$21.31 billion and a 7.6 times year on year gain in net profit to US$11.33 billion.
However, China Goldjoy Asset Management managing director Matthew Kwok is not expecting too many surprises.
He said the banking group is unlikely to have a large growth in net profit, plus the switch of management should drag the public attention to new strategy developments, though he agreed that HSBC has sufficient capital for share buybacks.
Stuart Gulliver, chief executive of HSBC, will leave the position this week after the results’ announcement.
Recently, he reportedly said the banking giant is unlikely to exercise any spinoff after many years of business restructuring.
For a long time English politicians have been critical of HSBC for its merger and acquisitions in earlier years “have led the company to the stage of being hard to manage,” but now Gulliver said such concerns have faded.
With the hope of an excellent result, the banking group’s stock price rose in Hong Kong before the Lunar New Year holiday and surged to HK$83.55 on the last trading day.
Last October, HSBC released its third quarter result and signaled its pivot to Asia was paying rich dividends as quarterly profits leaped fivefold, and that it will continue placing strong investments in the mainland over next few years.
The bank makes more than half of its profits in Asia, and its regional pivot is centered around the Pearl River Delta with plans to bolster its retail and wealth management business.
Back then, Gulliver said that the group expected sustainable profit efficiency from the region.