HSBC banks on profits to thwart split

HSBC will be hoping that its first quarter profits on Tuesday will be enough to sway shareholders and convince them to reject plans to break up the bank on Friday.

The global giant faces a crunch week, starting with its first quarter results on Tuesday. HSBC is expected to say its pre-tax profits were boosted by higher interest rates, taking them higher than the $4.2billion (£3.4bn) it registered for the same three month period last year.

HSBC has its annual meeting on Friday, where investors will be asked to vote on plans put forward by its largest shareholder, Chinese insurance giant Ping An, to break it up into Asian andwestern focused banks.

Ping An’s investment arm owns 8.3 per cent of HSBC and has been a shareholder since 2015. It says HSBC is underperforming and that its strong

Asian franchise is being hampered by itswestern operations.

It says spinning off the business into a separately listed, Hong Kongheadquartered bank would boost value. Under the Ping An plan, HSBC would retain a controlling stake in the Asian business. However HSBC is urging shareholders to vote against it.

Susannah Streeter, head of money and markets at Hargreaves Lansdown, said while investors will be looking for HSBC to report higher profits, the “elephant in the room” is its battle with Ping An.

“Pressure is now also coming from activist shareholder Ken Lui, but management are expected to hold firm, believing alternative structural options will not deliver increased value to shareholders,” she added.