...By Henry George for TDPel Media.
HSBC has reported pre-tax profits of £10.3bn ($12.9bn) for the first quarter, a significant increase from £3.4bn ($4.1bn) the previous year.
The results were boosted by a £1.2bn ($1.5bn) gain from its recent acquisition of the UK arm of collapsed Silicon Valley Bank (SVB UK), as well as the reversal of £1.7bn ($2.1bn) in write-downs relating to the planned sale of its French retail business to private equity.
There are no plans to cut any staff at SVB UK or close its London office, according to HSBC CEO Noel Quinn.
Shareholders are set to vote on a restructuring proposal at the bank’s annual general meeting on 5 May.
Profit Boosted by SVB UK Acquisition and Write-Down Reversal
HSBC announced a significant increase in pre-tax profits for Q1 2023 compared to the same period last year.
The £10.3bn ($12.9bn) profit was attributed to a £1.2bn ($1.5bn) gain from the acquisition of SVB UK and the reversal of £1.7bn ($2.1bn) in write-downs linked to the proposed sale of its French retail business.
SVB UK was acquired last month for £1 after SVB failed in the US.
HSBC has stated that it plans to change the name of SVB UK shortly, but will not be cutting any staff at the group or closing its London office.
Shareholder Dispute Ahead of Annual General Meeting
Ping An Asset Management, which owns an 8% stake in HSBC, has been involved in a long-running dispute with the bank over calls for an Asia-headquartered spin-off.
Shareholders are set to vote on the restructuring proposal at the bank’s annual general meeting on 5 May.
The bank’s CEO, Noel Quinn, has stated that the bank and Ping An have a “difference of opinion” over the structure of the bank, but that they both “share a desire to improve the performance of the bank.”
Analysis and Commentary
HSBC’s significant profit increase is partly attributed to the acquisition of SVB UK, which has already been leveraged to HSBC’s advantage.
The reversal of write-downs also played a major role in the reported profit.
However, it is worth noting that this is not an accurate reflection of the bank’s performance, as these gains are one-off events.
The upcoming vote on the restructuring proposal highlights a growing conflict with the bank’s top shareholder.
The disagreement over the proposed Asia-headquartered spin-off is a reminder of the ongoing tension between the bank’s global and regional operations.
It remains to be seen whether shareholders will approve the proposal, which would represent a significant shift in HSBC’s operations.
Despite these challenges, HSBC’s CEO has expressed confidence in the bank’s performance and ability to withstand future turbulence in the banking sector.
The bank’s sheer size and financial strength, as well as its recent gains, are seen as advantages in a sector that is experiencing instability.