Has HSBC’s Noel Quinn done enough to ward off Ping An’s split campaign?

HSBC’s CEO Noel Quinn said today that “international connectivity remains our greatest strength.”

It was clear he was attempting to ward off shareholder Ping An’s ongoing campaign to spin out HSBC’s Asian business, which makes the majority of the bank’s profit.

Quinn was speaking after the lender announced its results for the final quarter of 2022, which saw pretax profit nearly double to $5.2bn (4.3bn), and beat market expectations of $5bn. Revenue also beat expectations, rising 24 per cent to $14.9bn, boosted by higher interest rates.

In another veiled attempt to push back against the Ping An’s demands, Quinn said that good profitability and its global reach was “a formidable combination”, adding that HSBC was “firmly on track” to deliver its targets for 2023.

On top of strong performances from its home markets, Quinn praised the “stand-out year” for HSBC’s middle eastern business, adding the bank would be “devoting more resources to the Middle East” – a sign that the bank envisages a more global future than Ping An does.

HSBC also announced a series of sweeteners and future goodies for shareholders, emphasising that the bank’s current strategy “represents the best way to deliver shareholder returns”.

Going into 2023, HSBC said it will consider bringing buybacks forward to the first quarter results in May and revert to paying quarterly dividends.

It also said the “priority use” for the $10bn from the sale of its Canadian business would be used to pay a special dividend of $0.21 per share in 2024, subject to approval.

This has been seen as another attempt by the bank to persuade shareholders that they need not side with Ping An.

However, when he commented directly on the issue, he gave a very diplomatic answer, saying that both Ping An and HSBC have a “common objective to improve the performance of the business”. 

Ping An argues that HSBC’s position straddling east and west is untenable in the long run, as tensions rise between China and the West. Its campaign was turbocharged by UK regulation in 2020 that prevented banks from handing out dividends during Covid, starving HSBC’s Asian investors. 

But analysts were split as to how today’s results would affect Ping An’s campaign, although they agreed that the bank’s financial health was improving.

Jefferies’ Joseph Dickerson said: “I don’t think its going to be a one quarter performance to ward off Ping An’s campaign, but the bank has undertaken a number of shareholder friendly measures over the past quarters” such as the sale of the Canada business and the increased dividends.

“If the company carries on with this cadence then I could see Ping An taking on a more passive role,” Dickerson continued.

Senior Equity Analyst at Bloomberg Intelligence Tomasz Noetzel said “the bank is well on the recovery path, which together with recent nearly 40 per cent shares price rally reaffirms the view that any potential demerger is unlikely, with pressure from Ping An likely to ease.”

HSBC will need a stronger performance over the next few quarters to finally put Ping An’s campaign to bed, but its results today mark a strong start.