HSBC has pledged to restore its dividend to pre-coronavirus levels as soon as possible as Europe’s biggest bank pushes back against pressure from biggest shareholder Ping An to split up its Asian and Western operations. West.
The UK-based lender reported pre-tax profit of $5 billion for the second quarter of the year, beating analysts’ estimates of $3.9 billion, but down slightly from same period last year, when profits were $5.1 billion.
HSBC BankFirst half profit fell 15% to $9.2 billion as the bank charged a net $1.1 billion in expected credit losses and credit deterioration due to economic uncertainty and rising inflation. get a raise. The fees more than offset the positive impact of rising interest rates on its balance sheet.
CEO Noel Quinn said: “Our first half performance reflects much of the progress we have made since 2020, with good organic growth across our entire business and control. Tight cost control.
“We are now two and a half years into the transition to help fit HSBC into the future.”
The bank is battling a public campaign from Chinese insurance group Ping An, which owns about 9.2% of the shares, to expand its business in Asia and list it in Hong Kong. It hired Goldman Sachs and boutique consulting firm Robey Warshaw to set it up with a detailed defense strategy. HSBC’s top executives will face their shareholders in Hong Kong on Tuesday.
Quinn said in the results announcement that the bank “appreciates[s] the importance of dividends to all of our shareholders. We will aim to restore dividends to pre-Covid-19 levels as soon as possible.”
The Bank of England has restricted UK lenders from distributing dividends to shareholders during the pandemic as part of emergency measures aimed at improving the sector’s resilience. It lifted the ban in July 2021.
Canceled dividends are one of the Important reason behind Ping An’s call for HSBC to be broken up. The insurer wants the bank to base its Asia operations in Hong Kong, which would make it inaccessible to the UK central bank.
Revenue was reported at $12.8 billion for the second quarter, in line with analyst expectations and about 2% higher than in the same period last year. The bank said in the first half of the year, revenue was $25.2 billion, slightly lower than last year due to planned business liquidations and foreign currency impact.
HSBC has phased out its non-profit businesses in the West, including in the US and France, and reallocated capital to Asia and the Middle East. In the first half of the year, it acquired the insurance business Axa Singapore and increased its stake in Qianhai Securities, an investment bank in mainland China, to 90%. It also agrees to sell doing business in Greece and Russia.
HSBC said on Monday that it would pay an interim dividend of 9 cents a share but warned that a share buyback was unlikely this year.
However, it has raised its return on tangible equity target to at least 12% from 2023 on signs of growing confidence that it can boost profitability and a commitment to continue paying a quarterly dividend into year 2023.
The bank said its estimated credit loss is more “normalized” than last year’s Covid-19 release, which boosts earnings and has been impacted by Russia’s invasion of Ukraine.
