Another of the UK’s major high street banks is to have a change at the top.
But while the exit of Dame Alison Rose from NatWest Group last summer had been expected, after the bank’s former boss became embroiled in the Nigel Farage ‘de-banking’ scandal, the departure of Noel Quinn from HSBC seemed take the market by surprise this morning.
Mr Quinn is to retire from HSBC after an “intense” five years as chief executive, during which he has overseen the sale of its operations in Canada and Argentina under plans to streamline the business and focus more on Asia, where it has identified the greatest growth potential.
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His exit was announced as HSBC reported profits which were better than expected for the first quarter and announced it would return $8.8 billion to investors, which was perhaps the key reason why shares surged by nearly 5% today. The shareholder distributions include an interim dividend of $0.10 per share, a special dividend of $0.21 per share from the sale of its Canadian business, and a new buy-back of up to $3bn.
The bank’s pre-tax profits for the first quarter fell by $0.2bn to $12.7bn, ahead of guidance.
Matt Britzman, equity analyst at stockbroker Hargreaves Lansdown, observed that it has been an eventful tenure for Mr Quinn, who had taken over as the coronavirus pandemic was breaking out and had to “navigate geopolitical tensions between the US and China, political unrest in Hong Kong, and plenty of shareholder challenges”. The latter included a campaign to spin-off the bank’s Asian operations, which was seen off at its annual meeting in May last year.
Mr Britzman said: “He may be a hard act to follow, but market reaction suggests the strong position he leaves behind is enough to quell any uncertainty about who will lead the business from here.
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“Looking at the results, there was, as usual, a lot to unpack. The Canadian sale has been completed, meaning the special dividend is being released as expected. HSBC is moving forward with plans to ditch the Argentina business and has taken a $1.1bn hit in the process of reclassifying it for account purposes. This is all part of the ongoing strategy to shift away from non-core areas and focus more on Asia which is where investors see the most potential.”
The analyst added: “Strip out some of the one-off items, and underlying performance was better than expected. As we’ve seen across the banking sector, impairment charges came in lower than analysts had forecast. That’s particularly good news for HSBC, whose Chinese exposure has caused some issues in recent quarters. The lack of any material write-downs or impairments relating to Chinese commercial real estate is welcome.”
But Will Howlett, financial analyst at Quilter Cheviot, said the departure of Mr Quinn introduced an “element of uncertainty about the bank’s future leadership”.
He said: “HSBC marked a strong start to the year with solid financial performance and an impressive capital return. However, the announcement has been overshadowed by the unexpected news that CEO, Noel Quinn, will be stepping down. This comes as a surprise, especially given Quinn’s relatively short tenure during which he has led the bank through significant changes. The departure of Quinn introduces an element of uncertainty about the bank’s future leadership at a time when HSBC is navigating a complex global financial landscape.”
Shares in HSBC were trading at 699.7p, up 31.6p or 4.7% at 3pm.
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