HSBC has pushed against calls for a demerger or spin-off of its Asian business.
The London-headquartered bank was urged by China’s top shareholder Ping An Insurance Group Co to consider divestment of its Asian business to unlock more value for shareholders.
The idea was also supported by some Hong Kong retail investors and Hong Kong politician Christine Fong, who said on Sunday: “Bringing back the primary list in Hong Kong is the best way to protect the interests of minority shareholders.
“We are faced with the cancellation of the 2020 dividend text, so we strongly support Ping An to take a seat on HSBC’s board of directors.”
HSBC said its strategy has been reviewed by external consultants and that the results of the review will not be made public, even if they are shared with the board.
Chief executive Noel Quinn told Reuters news agency on Monday: “Look at the results for half a year and you will see the value of the current strategy.”
On Monday, the bank reported a pre-tax profit of $9.2bn for the six months ended June 30, down from $10.84bn a year ago, but ahead of analysts’ average estimate of $8.15bn.
HSBC said it would accelerate the restructuring of its US and European businesses and rely on its global network to drive profits.
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Mr Quinn said in the group’s half-year results that the bank’s “internationalism is the most defining characteristic of our identity”.
He continued: “Serving cross-border customers is what we do best. That’s how we can help them grow, and, we believe, the fastest way to accelerate returns for our shareholders.”
HSBC once owned 10% of Ping An, before selling the stake for a nice profit in 2012.
Now Ping An owns approximately 10% of the bank and is China’s most valuable publicly listed insurer.
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But part of its income is from HSBC dividends and the Bank of England banned UK lenders from paying dividends in early 2020 after COVID-19 became a pandemic.
Even when the dividend was reinstated in July last year, it was half of the rate paid by the bank till 2018.
Meanwhile, the bank’s financial results on Monday showed Asia accounted for 69% of its profits in the first half of 2022, up from 64% a year earlier.
The bank intends to pay dividends quarterly from 2023, with Mr. Quinn saying: “We understand and appreciate the importance of dividends to all of our shareholders.
“We will aim to restore the dividend to pre-COVID-19 levels as soon as possible.”