HSBC overhauled its leadership team with the sudden departure of its chief financial officer as part of its plans to succeed boss Noel Quinn, and reported better-than-expected profit for the third quarter.
The bank said on Tuesday that adjusted pre-tax profit was $6.5 billion, compared with $5.5 billion a year earlier, beating analysts’ estimates of $6 billion due to Rising global interest rates have helped drive profits higher.
HSBC Bank announced that Georges Elhedery, co-head of global banking and markets, will replace Ewen Stevenson as chief financial officer, placing Elhedery in a likely position to succeed Quinn.
In a surprise move, the bank said Stevenson would step down at the end of the year. Greg Guyett, formerly co-head of Elhedery, was immediately appointed global banking and markets chief operating officer.
“My ambition is to provide for the board. . . Quinn told the Financial Times. However, he added, “I’m not resigning anytime soon, I’m here for many years to come.”
The bank upgraded its guidance for net interest income to $32 billion this year and at least $36 billion next year. Quinn added that “next year will be the first year we’ll report a return on tangible equity above 12%.”
However, the bank still maintains the dividend payout ratio guidance of 50% in 2023 and 2024.
Pre-tax profit for the third quarter was $3.1 billion, down from $5.4 billion a year ago, although it was much higher than analysts’ expectations of 2.5. billion dollars. The drop was largely the result of a hit from selling French retail business and a $1.07 billion provision for projected credit losses, reversing a $659 million issuance made in the same period a year ago.
Stevenson said a “weak” property market in China and a “slight downturn” in the UK were the main drivers of supply.
After adjusting for impairments and foreign exchange impacts, revenue grew 28% from a year ago to $14.3 billion, up across all businesses on the back of rising interest rates.
Solid quarterly results come despite recent turmoil in UK forex and government bond markets and should strengthen HSBC’s defense against calls to split its operations. in Asia and the West.
The bank has faced pressure this year from its largest shareholder Ping Anholds more than 8% stake in the company and argues that cutting off the bank’s Asian business would add up to $35 billion in additional market value.
Asia accounted for more than 55% of HSBC’s $6.6 billion in adjusted pre-tax profit in the third quarter. “We continue to have a constructive dialogue with Ping An,” Quinn said.
While repeatedly turning down Ping An’s requests, the bank is working to reshape its global network to focus on Asia and other high-growth regions.
HSBC is in the process of leaving Greece and this month said it is in the early stages of strategic assessment of its profitable business in Canada that could lead to $9 billion worth of sales.
Quinn, however, quashed speculation that the bank would cut off its business in Mexico. “Mexico will not be up for sale anytime soon,” he said.
“We see that the business is growing. It’s a business that is generating good profits, and one that we believe can generate even greater profitability and profitable growth,” Quinn said.
The bank’s capital reserves – the tier one common equity ratio – fell 0.2 percentage points to 13.4% quarter-on-quarter, due in part to the sale of the French retail bank.