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HSBC reports significant updates

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2024-05-01

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A newsy Tuesday for the global banking giant HSBC Holdings: it lost a CEO, who is retiring; revealed a dip in earnings for the three months to March 31; announced another $US3 billion in buybacks for the year; and a small rise in its first dividend for 2024.

The new buybacks take the total so far this year to $US5 billion and will use money generated by asset sales, this time in Canada.

HSBC's earnings figure included a $US4.8 billion gain following the disposal of its Canadian banking business, which was partially offset by a $US1.1 billion impairment related to the sale of its business in Argentina.

CEO Noel Quinn is stepping down, and a search is underway to replace him—both internally and externally.

Pretax profit came in at $US12.7 billion for the quarter ended March versus $12.9 billion a year earlier. The results were better than the $US12.6 billion average of analysts’ forecasts.

While net interest income fell 3.4% to $US8.65 billion for the quarter from $US8.96 billion a year ago, net operating income increased 1.5% to $US20.03 billion from $US19.74 billion with gains from the asset sales.

HSBC will pay a first interim dividend of 10 US cents a share, up year-on-year from 9 cents. It will also pay a special dividend of 21 cents a share following the sale of its Canadian banking business. That will take the total payout to shareholders to 31 US cents a share, plus the buyback.

"I'm pleased with our start to 2024. We completed the sale of our Canada business and agreed to sell our Argentina business, both of which allow us to focus on markets with higher value international opportunities. Our good profit performance... in the first quarter has enabled us to continue the trend of rewarding our shareholders," CEO Noel Quinn said in the statement.

HSBC said Quinn has informed the board of his intention to retire from the bank after nearly five years leading the company and 37 years at the firm in total. Quinn said he plans to "pursue a portfolio career" going forward (which means taking board positions). Quinn will continue as CEO during the search process for his successor.

HSBC left guidance unchanged from that provided in February with the annual results. It continues to target a return on average tangible equity in the mid-teens for 2024, excluding notable items. It expects banking net interest income of at least $US41 billion.

In Tuesday’s markets slide, the results (and the extra payouts and buyback) were enough to see HSBC shares end the session with a solid gain of 2.75%, which was better than the London market’s small loss and bigger (1% plus) losses across much of the eurozone markets.

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