HSBC has relaunched its share buyback programme after second-quarter pre-tax profit surged well beyond expectations, marking a strong showing for Europe's largest bank by market capitalisation.

The FTSE 100 lender — valued at a market capitalisation of approximately £274bn, making it the London Stock Exchange's most valuable listed company — reported $10.1bn (£7.5bn) in pre-tax profit for the three months ending in the second quarter of 2026. The result comfortably surpassed an internal forecast of £9.5bn and represented a 60 per cent increase from the $6.3bn recorded in the same period a year earlier.

Group revenue rose 11 per cent to $37.7bn. Net interest income climbed eight per cent to $18.2bn, driven by the bank's structural hedging strategy of re-investing lower-yielding hedges at prevailing higher market interest rates. The group's net interest margin — a closely watched gauge of lending profitability — improved by four basis points to 1.61 per cent.

Fee income, prized by banks for its relative independence from interest rate movements, increased nearly 10 per cent to $7.3bn. The growth was fuelled by a robust performance in wealth management — a strategic priority for chief executive Georges Elhedery, as banks across the sector increasingly pivot toward fee-based revenue to reduce dependence on rate-sensitive lending income. Wealth management expanded 20 per cent to $5.5bn.

Buybacks Resume Amid Restructuring

HSBC announced it would resume share buybacks with a programme of up to $1bn, scheduled for completion before the bank publishes its third-quarter results. The move returns the bank to shareholder distributions following the capital outlay of its recent Hang Seng acquisition.

The group had paused repurchases following its October 2025 move to privatise Hang Seng Bank, when it offered HK$155 per share for the 36 per cent stake it did not already own, valuing the remaining holding at HK$106.1bn (£10.7bn).

Alongside the quarterly results, Elhedery raised HSBC's cost-cutting target for the end of 2026 from $1.5bn to $2bn. The original $1.5bn target had already been met at the start of the year. The bank said it expects to reach the new goal within its existing restructuring budget of $1.8bn.

Elhedery, who took the helm just over two years ago, has pursued an extensive overhaul of the group's operations. A central element of the restructure involved dividing the business into two broad regions: an "eastern" division covering Asia-Pacific and the Middle East, and a "western" division encompassing the Americas and Europe. The simplified structure consolidates what had historically been a complex array of global business lines, aligning the bank's cost base with its most profitable geographies.

Total group headcount has fallen to 206,161, a reduction of 2,559 since the end of 2025. In February, City AM reported that the bank was preparing to eliminate a number of investment banking roles on the same day bonus payments were distributed. Subsequent reports confirmed that investment bankers at vice-president level and above received no bonus upon termination.