HSBC today hit back at intense pressure from its biggest shareholder to spin out its Asia business.
The chief of Britain’s largest lender, Noel Quinn, said HSBC’s “strength as a well connected, global institution is the main reason our wholesale clients choose to bank with us”.
“We are determined to capitalise on the advantages our network gives us,” Quinn, 61, added.
The remarks are a veiled rebuff to Chinese insurer Ping An’s calls to carve out its Asian arm, which generates a huge proportion of the bank’s profits.
Quinn said a demerger would hit HSBC’s credit rating and distract executives.
Ping An’s proposal has gained support among Asian shareholders who were burned by UK regulators forcing HSBC to end dividends during the pandemic.
The disgruntled investor has argued selling off the Asia business would unlock shareholder value and reduce geopolitical risk.
HSBC today also hiked its profit forecasts and said it will restart its quarterly dividend from the beginning of next year in a move that may cool tension with investors, who the bank is meeting in Hong Kong today.
Analysts at Shore Capital said the drawn out conflict between HSBC and Ping An “brings added uncertainty to the investment case”.
A better than expected profit take steered the lender to announce a new dividend of nine cents per ordinary share for the second half of this year.
Profits hit $9.2bn (£7.5bn) in the first six months of the year, down from the same period in 2021 but well above analysts’ expectations.
A $1.1bn (£902m) build up of reserves to cope with an expected uptick in defaults caused by household budgets being squeezed by inflation surging to historic highs weighed on HSBC’s profits.
The rosy results boosted HSBC’s share price over six per cent, sending it to near the summit of the FTSE 100.
Its net interest margin – the difference between what a bank charges borrowers and pays to depositors – extended nine basis points, widened by the Bank of England’s five successive rate hikes.
HSBC’s common equity tier one ratio, a measure of the strength of a bank’s balance sheet, fell 2.2 percentage points, caused by a sharp fall in bond prices as investors pencil in more rate hikes from central banks.