Noel Quinn is stepping down after five years reshaping the global lender
By Josh MitchellFollow
Updated July 31, 2024 6:56 am ET
HSBC’s second-quarter net profit exceeded analyst expectations. PHOTO: LAM YIK/BLOOMBERG NEWS
LONDON—HSBC Holdings reported solid profit and announced another big payout to shareholders, lifting the global bank’s shares ahead of Chief Executive Noel Quinn’s retirement.
The bank, Europe’s biggest by market value, said net profit hit $6.4 billion in the spring. While that was a slight decline from the April-June period a year earlier, it far exceeded analyst expectations. HSBC HSBA 4.00%increase; green up pointing triangle pledged to return another $3 billion to shareholders through a new share buyback, and boosted its financial targets for next year.
HSBC stock rose nearly 4% in London on Wednesday morning, after the upbeat earnings report.
Quinn surprised investors in April when he said he would retire after more than four years as CEO to achieve a better work-life balance. The bank said this month Georges Elhedery, its chief financial officer, would succeed Quinn on Sept. 2.
The outgoing chief had a rocky start, taking over permanently just as the pandemic hit and angering shareholders by suspending a dividend. He went on to reshape the bank.
HSBC shifted away from retail banking in key Western markets such as Canada, the U.S. and France, while expanding in Asia and the Middle East. Since 2019, HSBC said Wednesday, it has handed $54 billion to shareholders through dividends and buybacks.
Shares in HSBC have risen more than a third since Quinn became permanent CEO in March 2020. High interest rates have boosted profitability, but analysts remain skittish about how the lender will perform if and when global interest rates subside. HSBC’s Hong Kong stock priceSource: FactSetNote: 10 Hong Kong dollars=$1.28.Noel Quinnnamedinterim CEO2015’2020304050607080HK$90
Meanwhile, the bank—whose business depends partly on connecting companies around the globe—is bracing for heightened geopolitical tension between the U.S. and China if Republican presidential nominee Donald Trump reclaims the White House this November.
“We work with all governments of the world to make sure that we help their economies develop, we help their economies connect,” Quinn said. “We’ve been doing that for 158 years. The landscape of the world has changed economically significantly in that time, politically in that time, and we’ll continue to very much focus on our customers and helping with international connectivity.”
He added that Elhedery will have one key advantage over him in that regard: “I only speak English; he speaks six languages. So I think he’s certainly beating me on that one.”
HSBC is highly influenced by interest rates because it is such a big retail and commercial lender in the U.K. and Hong Kong. Higher global rates, due to central banks’ efforts to rein in inflation, have widened the gap between what HSBC pays depositors and charges borrowers.
Quinn said the bank is increasingly earning money from fee-based businesses, making it less sensitive to rates. Those business lines include managing the wealth of high-income clients in Hong Kong and mainland China, advising businesses as they expand in new regions, and handling commercial transactions. Earnings outside of net interest income rose 12% in the second quarter from a year earlier.
Elhedery said he plans to keep the same strategy.
Citigroup analyst Andrew Coombs said in a note to clients, “The new CEO inherits the bank in a much stronger position and with the ‘pivot to Asia’ largely complete the focus going forward appears to be even more on international connectivity.”
Write to Josh Mitchell at joshua.mitchell@wsj.com