HSBC raises divi to quash break-up talk
Shares hit four-year high but bank under fire over poor savings rates
HSBC shares surged to their highest level since 2019 yesterday after it delivered a bumper shareholder payout – amid a battle with investors calling for a break-up of the bank.
The lender reported a 7.3pc fall in pre-tax profits to £14.6bn for 2022, but that beat City expectations and was accompanied by the announcement of its highest total dividends since 2018.
HSBC also pledged a further payout to be distributed when the sale of its business in Canada is completed later this year.
The rewards looked calculated to address pressure led by its largest shareholder Ping An, a Chinese insurance giant, for a break-up of the bank – which though based in London has its origins in Hong Kong and makes most of its money in Asia.
But HSBC said the results showed its existing strategy was working and chief executive Noel Quinn said the group had ‘fundamentally transformed the profitability of what were loss-making or near loss-making businesses in the UK and Europe’.
Quinn signalled the pressure to keep costs down would not abate as it seeks to lop a further £250m
‘Quick to put up mortgage rates’
off them this year. That is likely to raise more fears for HSBC’s UK branch network after the bank said in November that it was cutting the number of outlets by a quarter.
The lender’s UK boss Ian Stuart was criticised earlier this month after telling MPs that the programme of closures ‘is what customers want’.
Meanwhile, HSBC and other lenders have come under fire for being quick to put up borrowing rates when interest rates rise, but being less forthcoming in rewarding savers.
The gap between those two rates, known as the net interest margin, is a key profit-making metric for banks – and HSBC reported an increase in that measure yesterday.
Sir Philip Augar, an independent banking expert, told BBC Radio 4’s Today programme: ‘I think savers have got legitimate questions to ask of the banks.
‘Why are you so quick to put up our mortgage rates and... so slow to pass on the effects of increased interest rates to our savings accounts? Particularly since borrowers are having difficulty meeting interest repayments at a time of high inflation and squeeze on living standards.’
Details of Quinn’s pay package, which rose by 14pc to £4.7m, are also likely to attract anger. Once long-term incentive awards are included, it could total £10.5m.
But investors were not put off, sending shares up 4.3pc, or 26.8p, higher to 647.5p – the highest level since September 2019.
Quinn will head to China for the first time since the pandemic to meet investors and shore up confidence in HSBC’s strategy.
HSBC continued to insist yesterday that a break-up was not on the cards.
Chairman Mark Tucker said: ‘It has been, and remains, our judgment that alternative structural options would not deliver increased value for shareholders. Rather, they would have a material negative impact on value.’