- Net operating income $20.8bn vs $21.0bn expected
- $720mn impairment vs $928mn expected
- Profit before tax £12.7bn (down 2.3%) vs $12.6bn expected
- CEO retiring
Matt Britzman, equity analyst, Hargreaves Lansdown:
“HSBC has thrown a spanner in the works. News that CEO Noel Quin plans to retire came as a surprise. Change at the top usually causes a wobble, more so when it’s unexpected, and this does raise some questions about how the strategy will evolve from here. The HSBC portfolio is going through a reshuffle, and Quin’s far from completing his mission to get costs under control.
He took the reins just as the pandemic was spreading across the world, a hugely uncertain time to lead a global bank and pivot away from its more traditional markets. He’s also had to navigate geopolitical tensions between the US and China, political unrest in Hong Kong, and plenty of shareholder challenges. He may be a hard act to follow, but market reaction suggests the strong position he leaves behind is enough to quell any uncertainty about who’ll lead the business from here.
Looking at the results, there was, as usual, a lot to unpack. The Canadian sale has been completed, meaning the special dividend is being released as expected. HSBC is moving forward with plans to ditch the Argentina business and has taken a $1.1bn hit in the process of reclassifying it for account purposes. This is all part of the ongoing strategy to shift away from non-core areas and focus more on Asia which is where investors see the most potential.
Strip out some of the one-off items, and underlying performance was better than expected. As we’ve seen across the banking sector, impairment charges came in lower than analysts had forecast. That’s particularly good news for HSBC, whose Chinese exposure has caused some issues in recent quarters. The lack of any material write-downs or impairments relating to Chinese commercial real estate is welcome.”
