HSBC Holdings, Europe’s biggest bank, reported a pre-tax profit of $21.6 billion for the first half of the year, down by 0.4% from last year but still surpassing expectations. Outgoing CEO Noel Quinn, who steps down in September after five years in the job, announced the results today, which were well-received by investors.
One of the major highlights of the results was the announcement of a $3 billion share buy-back, on top of a $5 billion buy-back earlier this year. This brings the total amount of share buy-backs during Mr. Quinn’s tenure to $18 billion, along with $36 billion in dividends. This bodes well for the bank’s future financial performance.
In addition, HSBC also announced that Jon Bingham, a former partner at KPMG, will become its interim chief financial officer, succeeding Georges Elhedery who will take over as CEO. This will be the fourth CFO for HSBC in the past six years.
HSBC’s success can be attributed to its diversification strategy, as revenue from its wealth division saw a 12% increase to $4.3 billion and its wholesale transaction banking revenue rose by 4% to $1.1 billion. Mr. Quinn stated, “The stand-out performance, I think, is our ability to continue to grow revenue from alternative sources other than interest income.” The bank’s return on tangible equity (RoTE) for the half-year was at 17.0%, excluding one-off items.
However, there are concerns about the bank’s performance in the future, as interest rates in key markets are expected to decline. Analysts at RBC Capital Markets believe that HSBC’s earnings momentum has come to an end. There is also unease about the bank’s exposure to Hong Kong and China, despite comments from Mr. Elhedery that “the big challenges are behind us.”
Despite these challenges, Mr. Quinn’s tenure has been marked by significant changes at HSBC. He has led the bank through the pandemic while also increasing its exposure to China, as per the direction of HSBC’s chairman, Sir Mark Tucker. Mr. Quinn has also successfully navigated the bank through a distracting campaign by its biggest shareholder, Chinese insurer Ping An, to break itself up. Additionally, he oversaw the divestment of unwanted businesses in France, Argentina, Canada, and the United States.
As Mr. Quinn hands over the reins to Mr. Elhedery after 37 years with HSBC, it is clear that he has left the bank in a strong position for future success. HSBC’s ability to adapt and diversify in a constantly changing global landscape will be key to its continued growth and success.
