HSBC Holdings plc has bounced back with after-tax profit of $4.2 billion — an increase of $2.2 billion — for the third quarter compared with the same period in 2020.

The bank also announced a massive share buyback of up to $2 billion after the profit line dipped over 2019 and 2020.

In a filing with the Bermuda Stock Exchange, HSBC said that the earnings increase was driven by a release of expected credit losses and other credit impairment charges and a higher share of profit from associates.

The bank, which has a subsidiary in Bermuda, also reported a higher nine-month profit after tax of $12.7 billion, up $7.5 billion over the first three quarters of 2020.

The bank said that all regions were profitable in the third quarter, demonstrating continued earnings diversity.

HSBC group chief executive Noel Quinn said: "We had a good third-quarter performance, with strong growth in profits supported by additional credit provision releases.

“Our strategy remains on track, with good delivery in all areas. This was reflected in more consistent top-line growth, robust lending pipelines across our businesses, and rising trade and mortgage balances.

“While we retain a cautious outlook on the external risk environment, we believe that the lows of recent quarters are behind us. This confidence, together with our strong capital position, enables us to announce a share buyback of up to $2 billion, which we expect to commence shortly."

The bank said that it continues to make progress on an environmental, social and governance agenda, including climate commitments announced this month.

The revenue outlook has become more positive, with fee growth across many businesses and a stabilisation of net interest income, which the bank expects to begin to increase in the coming quarters from lending growth and earlier-than-anticipated policy rate rises.

Also, given the current consensus economics and default experience, the bank expects a release of expected credit losses and other credit impairment charges (ECL) for 2021, with the potential for a further small net release of ECL in Q4.

There is now about $1.2 billion remaining of the Stage 1 and Stage 2 ECL allowance uplift made during 2020. The bank does not currently expect ECL charges to normalise towards their medium-term range of 30bps to 40bps of average loans until the second half of 2022.

HSBC said: “We continued to demonstrate strong cost control over the course of the year. Given inflationary pressures, continued investment and the impact and timing of recently announced acquisitions and disposals, we now expect adjusted costs of approximately $32 billion for 2021 and 2022, excluding the estimated UK bank levy charge of $0.3 billion.

“With an improved revenue outlook and the prospect of rising policy rates, we remain committed to achieving a RoTE [return on tangible equity] of greater than or equal to 10 per cent over the medium term.

“We remain well placed to fund growth and step up capital returns, and now intend to normalise our CET1 [the ratio that compares a bank's capital against its assets] position to be within our 14 per cent to 14.5 per cent target operating range by the end of 2022.

“We intend to achieve this through a combination of growth and capital returns, as well as from an expected $20 billion to $35 billion uplift in RWAs [risk-weighted assets] in 2022 due to regulatory developments.”