HSBC (HSBA.L) declared a share buyback program of up to $3bn (£2.33bn) from investors, who will receive $1.8bn (£1.4bn) in fresh dividends as Europe’s largest lender reported a rise in second quarter profit.

The bank posted pretax profit in the six months to June of $21.56bn, down from a $21.66bn average of broker estimates compiled by HSBC, according to Reuters.

Its second quarter results beat expectations, with profits defying forecasts of a fall by rising 1% to $8.9bn.

Operating expenses of $16.3bn were 5% higher than in the first half of 2023, driven primarily by higher technology spend and investment, inflationary pressures, and an increase in the performance-related pay accrual.

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Net interest margin decreased to 1.62% from 1.7% on a year ago, reflecting a rise in the funding cost of average interest-bearing liabilities, but was better than the 1.53% consensus forecast.

The Asia-focused bank said it will pay an interim dividend of 10 cents a share, the second payment of 2024 following 31 cents announced last quarter, bringing the total of fresh dividends to $1.8bn.

Between dividends and share buybacks, HSBC shareholders are in for a $4.8bn windfall.

The $3bn buyback followed a $5bn buyback announced earlier this year means the bank will have paid $36bn in dividends and $18bn in share buybacks to shareholders over Quinn's tenure as CEO.

HSBC is due to welcome its new CEO Georges Elhedery in September following Quinn's retirement.

“After achieving a record profit performance in 2023, we had a strong first half financial performance that reflected our strategy execution and revenue diversification over the past five years,” Quinn said.

“We remain confident that we can deliver attractive returns, even in a lower interest rate environment, as a result of macroeconomic trends that play to our strengths, market-leading businesses connecting high-growth markets that we are continuing to invest in, and ongoing cost discipline.”

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The lender highlighted its commitment to its core London and Hong Kong markets, pointing out an 8% rise in international customer numbers to 2.7 million in January-June, with 345,000 new-to-bank account openings in Hong Kong.

It also saw signs of relief from a slowing economy and worsening property sector in China, after booking a $3bn writedown on the market last year.

On the outlook, the FTSE 100-listed lender (^FTSE) said it will target a return on average tangible equity (RoTE) "in the mid-teens" for both 2024 and 2025, which compares to current consensus forecasts of 15.8% for this year and 12.5% for 2025.

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