HSBC announced a dividend of $0.10 per share and flagged the first of a new buyback cycle of up to $2 billion
Dividends
May 2, 2023
May 2, 2023
HSBC, Europe's largest bank, reported a pre-tax profit of $12.9 billion for the quarter ending March 2023, triple the profit it made during the same period in 2022. The bank’s headline profit was boosted by the reversal of a $2 billion impairment it took against the planned sale of its French business, reflecting that the deal may not go through. HSBC beat analyst forecasts of $8.64 billion, showing strength in its non-interest income revenue. The bank’s markets unit saw a 20% revenue rise from a year ago, bringing in more than $1 billion from assets held for trading and global banking.
HSBC’s Q1 results exceeded expectations, enabling the bank to reinstate its dividend for the first time since 2019. The bank announced a dividend of $0.10 per share and flagged the first of a new buyback cycle of up to $2 billion. The news comes ahead of the bank’s annual meeting on May 5, where shareholders will vote on two resolutions filed by a Hong Kong investor and supported by Ping An Insurance Group Co of China. These resolutions call for higher dividends and regular updates on strategic proposals. HSBC has opposed these resolutions, and shareholder advisory firms Glass Lewis and Institutional Shareholder Services have recommended that investors vote against the proposal.
HSBC’s strong Q1 results were partly due to aggressive policy tightening, which boosted profit margins. The bank’s performance highlights how monetary policy tightening has lifted profit margins in Asia. HSBC’s CEO, Noel Quinn, said on a call that the bank’s results showed its strength in a rising rate environment, and downplayed the risks of further contagion after First Republic’s rescue.
With the rate cycle nearing its peak, the challenge for HSBC will be to sustain its margins this year and beyond. The bank also reported a delay in the sale of its Canada business, which is a key part of its strategy to shrink in slow-growing Western markets where it lacks scale. HSBC has recently tried to accelerate its Asian pivot to head off calls from its biggest shareholder, Ping An Insurance Group Co of China, to spin off the Asia unit to boost shareholder returns. Despite the surging profit, HSBC did not raise its key performance target of a return on tangible equity of at least 12% from this year onwards, which analysts were anticipating.
Members of LevelFields received the alert of this event on May 2, 10:36 AM ET
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