HSBC Exceeds Expectations in First-quarter Earnings; CEO Noel Quinn Announces Retirement

HSBC exceeded market expectations in its first-quarter earnings report released recently, alongside the unexpected departure of Group Chief Executive Officer Noel Quinn. The bank reported revenue of $20.8 billion, marking a 3% increase from the same period last year, surpassing the median LSEG forecast of approximately $16.94 billion. Despite a slight dip in pretax profit to $12.65 billion from the previous year’s $12.89 billion, this figure still outperformed analysts’ forecasts, which had estimated $12.61 billion.

However, profit after-tax income declined to $10.84 billion, compared to $11.03 billion in the first quarter of 2023. Additionally, HSBC, Europe’s largest bank by assets, declared a first interim dividend of 10 cents per share and a special dividend of 21 cents per share following the completion of the sale of its banking business in Canada.

In a significant development, Noel Quinn, who has served as Group CEO for nearly five years, announced his retirement. Group Chairman Mark Tucker commended Quinn’s leadership, highlighting his substantial contribution to the bank over his 37-year tenure. Aileen Taylor, HSBC’s group company secretary and chief governance officer, praised Quinn’s achievements during his tenure, citing record profits and the strongest returns in over a decade.

Quinn will continue as Group CEO while the bank initiates the search for his successor. To facilitate a smooth transition, he has agreed to remain available until the end of his 12-month notice period, which concludes on April 30, 2025.

Key highlights from the bank’s first-quarter financial report include a decrease in the net interest margin to 1.63% from 1.69% a year ago and a common equity tier 1 ratio of 15.2%, up from 14.8% in the fourth quarter of 2023. Basic earnings per share stood at $0.54, slightly higher than the $0.52 reported in the same period last year.

HSBC reiterated its outlook for 2024, maintaining guidance from February. The bank targets a return on average tangible equity “in the mid-teens” for 2024, with banking net interest income of at least $41 billion, subject to global interest rate conditions.

Additionally, its CET1 capital ratio is expected to remain within the medium-term target range of 14% to 14.5%, with a dividend payout ratio targeted at 50% for 2024, excluding notable items and related impacts. Following the results’ release, HSBC shares in Hong Kong rose by 1.56%, marking their seventh consecutive day of gains.