HSBC’s profits rose 92% on higher borrowing costs, which boosted net interest income. However, its shares fell 2% as it missed a key return target, even as the bank, Europe’s largest, offered investors a windfall in dividends and share buybacks.
The London-based bank said on Tuesday it intended to pay a special dividend of $0.21 per share, as a priority use of proceeds from the sale of $10 billion of its Canadian business, a once said sale is completed by the end of this year.
However, some analysts had expected HSBC to also raise its key target of achieving a tangible return on capital of at least 12% from this year, a target the bank maintained in its earnings report. Its shares in Hong Kong were down 2.1% at 0540 GMT.
HSBC’s asset sales have accelerated over the past year as it resists pressure from its largest shareholder, Ping An Insurance Group, which has urged the bank to spin off its Asian business to boost profitability, a move that HSBC opposed.
Group CEO Noel Quinn said in a statement: “With higher yields we will have increased distribution capacity, and we will also consider a special dividend once the sale of HSBC Canada is complete.”
Meanwhile, HSBC said it still expects to complete the sale of its Russian business in the first half of 2023, assuming a loss of $300 million.
London-listed HSBC shares, which are currently trading at their highest level in around three and a half years, are up 45% from lows in October 2022, when a drop in quarterly profits and a sudden change in their CFO spooked investors and sent its shares plummeting 7%.
Since Quinn took over in March 2020, just as the COVID-19 pandemic was sweeping the world, the stock has gained 25%, although it remains below the 50% rise for the overall market. . . So far this year, its shares are up 20%, compared to 7% for the FTSE index.
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