HSBC said on Monday it would buy back up to an additional $2 billion in shares as it reported better-than-expected earnings in the second quarter.
The bank, which is based in London but generates much of its profit in Asia, has announced $5.5 billion in share repurchases since the second half of last year as its prospects have improved.
Since 2015, HSBC has significantly reshaped its operations by shedding tens of thousands of jobs, selling underperforming businesses and shrinking its global investment banking business.
“We have made an excellent start to 2017, reflecting the changes we have made since our investor update in 2015 and the strength of our competitive position,” Stuart Gulliver, HSBC’s chief executive, said in a news release.
“Our three main global businesses performed well, generating significant increases in both reported and adjusted profit before tax, and gaining market share in many of the products that are central to our strategy,” he added. “Revenue grew faster than costs on an adjusted basis compared with last year’s first half, and we passed a number of major milestones on the way to completing our strategic actions.”
The bank reported a profit of $3.9 billion in the second quarter, compared with $2.5 billion in the second quarter of 2016. It said profit before taxes was $6 billion when adjusted to remove the impact of changes in currency and significant items. That was ahead of analysts’ expectations.
The positive earnings report comes as Douglas Flint prepares to step down as HSBC’s chairman in October.
Mark Tucker, the chief executive of the Asian insurer AIA Group, was named as Mr. Flint’s replacement in March. Mr. Tucker would be the first outsider to take the chairman’s role at HSBC.
One of his first tasks would be to lead the search for a replacement for Mr. Gulliver, who plans to retire.
During the quarter, the bank took a provision of $865 million related to ongoing inquiries and litigation into potential manipulation of foreign currency markets.
HSBC said it was working with regulators in the United States and the United States Department of Justice to try to resolve investigations into HSBC’s foreign exchange conduct.
The Justice Department has charged two former HSBC executives, who are expected to go to trial in September.
Inquiries into the rigging of the currency markets have led to billions of dollars in penalties and guilty pleas to criminal charges in the United States by some of the world’s biggest banks, including Barclays, Citigroup, JPMorgan Chase and the Royal Bank of Scotland. Several traders have lost their jobs as a result.
By CHAD BRAY – nytimes