5th May 2023 11:50
(Alliance News) - HSBC Holdings PLC's leadership set out a confident outlook, amid recent turmoil in the banking sector, and once again urged shareholders to vote down a proposed restructuring from a major shareholder at its annual general meeting on Friday.
Chair Mark Tucker was quick to try and reassure investors, following the recent collapses of three US banks and the takeover of Credit Suisse Group AG following a liquidity crisis.
"I do not believe the issues experienced by these banks represent a systemic risk, but the market has yet to settle," he said.
"Specifically, HSBC has a strong balance sheet, good liquidity, good profitability and good diversity of earnings."
Earlier this week, the bank revealed strong first-quarter results, with pretax profit more than tripling year-on-year to USD12.89 billion, and beating market consensus. It declared its first quarterly dividend since 2019 and a share buyback of up to USD2 billion.
On Friday, its chair said the bank is also considering a special dividend of 21 cents per share in the first half of 2024, to return to shareholders the proceeds of the planned sale of its Canadian banking arm.
"And once we close the Canada transaction, we will decide how much of the remaining proceeds - after the special dividend - we retain within the business, and how much we will return to shareholders via buybacks," Chief Executive Officer Noel Quinn added.
The USD10 billion sale to Royal Bank of Canada was first announced back in November.
Both stressed the strength of the bank's geographical diversity, urging shareholders to vote down the proposals from its largest stakeholder, Chinese insurer Ping An Insurance Co of China Ltd.
Ping An has put forward proposals for HSBC to divest of some of its Asian operations, and list them separately in Hong Kong.
In a public statement last month, the insurer cited HSBC's underperformance against its peers. It also pointed to the precarity of the bank's strategy of straddling East and West amid simmering geopolitical tension between the US and China.
Speaking at a conference centre in Birmingham on Friday, Tucker said: "Being global is how we generate a significant portion of our revenues and is central to our whole strategy.
"A restructuring or spin-off would mean that we lose this revenue, as our bank would no longer have the connectivity which our customers value."
It would also create a "period of uncertainty" which would hurt or distract its clients, employees and shareholders, Tucker put forward. The costs would also be "significant" for a number of years, he added.
Tucker also encouraged shareholders to vote down a proposal that would mandate a fixed dividend, deeming it not a "prudent" practice for banks or companies in general.
"The board needs to take into account financial performance, the market context and the bank's resilience and capital and reserve levels as well as the need to invest in our future and meet all our legal and regulatory requirements," he said.
"We are already delivering attractive returns through our dividend pay-out ratio approach. And as I have said, our current strategy is working."
Shares in HSBC rose 1.8% at 594.60 pence each in London on Friday during late morning dealings.
By Elizabeth Winter, Alliance News senior markets reporter
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