HSBC this morning announced its first quarterly dividend since the pandemic and a $2bn share buyback as the bank attempted to convince shareholders of the merits of its global business.
Shares popped 4 per cent on the open in London.
The bank said it expects the buyback to commence after the bank’s AGM on Friday, while the dividend was worth $0.10 per share.
The payouts came as pretax profit at the bank more than tripled to $12.9bn from $4.1bn the year before.
Chief executive Noel Quinn said: “With the good momentum we have in our business, we expect to have substantial future distribution capacity for dividends and share buy-backs.”
The bank’s profit included a provisional gain of $1.5bn on the acquisition of Silicon Valley Bank UK (SVB UK) in March.
It also reflected the reversal of a $2.1bn impairment from the planned sale of its French retail banking business to Cerberus. Cerberus warned last month that it will have to stump up more cash to pay for the transaction as a result of higher interest rates, throwing the completion of the deal into doubt.
Like other UK banks, HSBC was also boosted by higher interest rates with its net interest income rising 38 per cent to $9.0bn. Profit in the UK ring-fenced bank rose to $3.1bn from $1.2bn last year.
The strong results come as HSBC attempts to ward off an increasingly fractious shareholder campaign to spin off the bank’s Asian business, led by its largest shareholder Ping An.
The Chinese insurer argues that HSBC’s Asian business is held back by its underperforming European and American divisions.
However, Quinn noted “our profits were spread across our major geographies, and all three global businesses performed well as we continued to meet our customers‘ needs through our internationally connected franchises.”
Shareholders will vote on the spin-off proposal at the bank’s AGM this week.
Quinn also discussed the acquisition of SVB UK, describing it as a “natural fit” for HSBC as the bank seeks to build up its network in the technology and life sciences sectors.
The bank has made over 40 hires in the US and Quinn confirmed it was looking at other opportunities, particularly in Israel and Asia.
“We’re building a network of capabilities that can serve the technology and life sciences companies on a global basis,” Quinn said.
Although HSBC wrote off $200m of SVB UK’s assets, Quinn said the bank was aware of these assets when it conducted its due diligence.
“In the weeks that have passed since the time we’re doing the deal, we’ve had no surprises. The quality of the loan book is good, the UK business was well run and it was a good portfolio of customers. It gives us the opportunity to build upon a very strong base,” he said.
The results came just a day after Californian-lender First Republic became the latest casualty of the banking crisis, as it had to be rescued by JP Morgan.
Quinn said “we do not believe that there is a global banking crisis on the horizon. We think there are some challenges that have been evidenced in some of the regional banks in the US but we do not believe that systemic in the US across all banks.”