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(Il Sole 24 Ore Radiocor) HSBC stands out among the blue chips on the London Stock Exchange after announcing, together with better-than-expected quarterly accounts, a new share buyback plan, an extraordinary coupon and CEO Noel Quinn’s retirement from the scene.
In detail, Quinn “informed the board of his intention to retire from the bank after almost five years in the role” and 37 years of career in the group. The board of directors “has begun the formal procedure to find a successor, taking into consideration both internal and external candidates.” Quinn will remain in the role “during this process and to ensure a smooth and orderly transition.” Georges Elhedery, who has been HSBC’s chief financial officer since the start of 2023, is one of the leading candidates to replace Quinn, who became HSBC’s interim in 2019, replacing John Flint and has been given the job permanently the next year. He managed the group during the Covid-19 pandemic and strengthened the business in Asia, where HSBC generates most of its profits. The British group also decided a new share buyback program worth $3 billion, after completing the previous 2 billion plan, which will have an impact of 0.4 percentage points on the Cet 1 capital index. The new buyback should begin “shortly, after the annual shareholders’ meeting in May”. Added to this is the payment of a «dspecial dividend of $0.21 per share», in addition to a first ordinary coupon payment of $0.10, to be paid in June, «following the completion of the sale of the banking assets in Canada». On the accounts front, HSBC announced that it has closed the first three months of 2024 with net profit attributable to $10.18 billion down from 10.33 billion last year, but higher than the 9.7 billion expected by analysts. Pre-tax profit fell $0.2 billion to $12.7 billion and includes a $4.8 billion gain from the sale of the Canadian business, partly offset by a $1.1 billion write-down of the Argentina business . In the fourth quarter of 2023, HSBC suffered a net loss of 153 million dollars, due to the 3 billion writedown of its stake in the Chinese Bank of Communications. It should also be noted that last year’s accounts were supported by the capital gain linked to the sale of the French branch and the acquisition of the British division of Silicon Valley Bank. Revenues in the quarter increased by 0.6 billion to 20.8 billion, reflecting on the one hand a decrease of 0.3 billion in the net interest margin to 8.7 billion and on the other an increase of 0.9 billion in other revenues. The guidance – specifies the bank – remains unchanged compared to what was announced on 24 February at the presentation of the annual accounts. HSBC continues to target an adjusted ROTE of around 15%, with a net interest margin of at least $41 billion. Goldman Sachs confirmed its buy recommendation on the stock with a price target of 817 pence. UBS analysts maintain their ‘Neutral’ rating, with a reference price of 630 pence, commenting that the accounts are better than expected and the distribution to shareholders is significant and also saying they are “slightly surprised” by the fact that the stock on the stock exchange so far it has not done better, with a share price rising by 5% since the beginning of the year compared to the average +16% of the European banking sector.
