HSBC to start share buyback of up to US$2 billion

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The bank's chief executive John Flint - who only took over in February - said: "A stronger revenue environment enabled us to invest in growing the business".

"We've got strong progression in terms of revenue across our four global businesses", he said.

Shares in HSBC Holdings (LON:HSBA) have fallen into the red in London this morning, even as Europe's biggest bank unveiled plans to return cash to shareholders.

HSBC said it's in "active discussions" with the US Department of Justice about solving civil claims based on the department's investigation of HSBC's legacy RMBS securitisation activities.

The bank made over 75 per cent of its profits in Asia a year ago. "We intend to deliver positive jaws [the ratio for how income growth exceeds expenses growth] for 2018".

The buyback is expected to be HSBC's only one this year "given the growth opportunities we now see", the company said in an investor presentation Friday.

HSBC CEO JOHN FLINT, attributing the rise in costs to investment in its retail banking businesses in its core markets of Britain and China. Such buybacks boosted investor confidence in the bank last year, pushing up its share price from the five-year low it hit in April 2016.

On the other hand, the rising costs and subdued return on equity reflect some of the challenges Flint still faces. The group's reported profit before tax, however, fell four percent to $4.8 billion, with higher operating expenses offsetting the rise in revenue.

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Nevertheless, the first-quarter numbers still "represent a good start for 2018 for HSBC", Iain Mackay, HSBC's group finance director, told CNBC's Sri Jegarajah after the release of the results.

Signing off after a turbulent seven-year tenure, Mr Gulliver spent much of his time managing scandals and winding down businesses while trying to bring the bank back to revenue growth.

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

Shares were down 1.4 per cent on the open.

Rising interest rates helped the bank generate more profit from a large base of deposits after years of low rates in the USA pushed down margins.

"We continue to benefit from interest rate rises and economic growth, particularly in Asia".

He added that commercial banking had made "notable progress" in Hong Kong and the United Kingdom, while retail banking and wealth management made further headway in the United Kingdom mortgage market.