HSBC has announced a 2 billion US dollar (£1.5 billion) share buyback alongside a surprise drop in first quarter profits.
The London-based banking giant saw pre-tax profit slip 4% in the period to 4.8 billion US dollars (£3.5 billion), largely due to a hike in operating expenses.
Costs related to business investment and enhancing “digital capabilities” rose 13%, which outstripped revenue growth, which was up 6%, or 13.7 billion US dollars (£10.1 billion).
Shares were down over 2% in early trade in London.
HSBC also said it will shortly commence its latest share buyback, following 5.5 billion US dollars (£4 billion) worth of share repurchases the lender has carried out over the last two years.
New chief executive John Flint, who took over as top dog in February, said that HSBC is benefiting from interest rate hikes and economic growth, particularly in Asia.
He said that the bank’s “primary focus is to grow the businesses safely, and we have increased investment to deliver that aim”.
Net income came in at 3.1 billion US dollars (£2.3 billion), little changed from the previous year.
HSBC is Europe’s biggest bank, but earns most of its profits from Asia.
Last year, it completed a corporate overhaul to raise profitability by focusing more on high-growth Asian emerging markets while shedding businesses and workers in other countries.
Charlie Huggins, manager of the Hargreaves Lansdown Select UK Income Shares fund – which holds shares in HSBC, said: “The increased investment for growth suggests that management are feeling more confident in their prospects.
“However, it will weigh on near term returns. We expect the shares to be a bit weaker this morning as investors focus on the latter and await evidence that these investments are paying off.
“HSBC’s vision is to become the premier bank for facilitating business between China and the rest of the world. Investment is being poured into China’s Pearl River delta region and early signs are encouraging.
“The vast expansion of Chinese infrastructure and industrial capacity seen in recent decades bodes well for the region’s future growth and HSBC should be well placed to benefit.”