HSBC Holdings PLC (LSE:HSBA) chief executive Noel Quinn delivered some surprises with the bank's first quarter results, including announcing his retirement and a new $3 billion share buyback.
The Asia-focused lender reported a pre-tax profit of $12.7 billion for the first three months of 2024, down from $12.9 billion a year ago but beating consensus forecasts of $12.6 billion.
Its bottom line was boosted by a $4.8 billion gain from the disposal of its Canadian banking business, partly offset by a $1.1 billion impairment as it prepared to sell its business in Argentina. Last year's profit was boosted by a $2.1 billion impairment reversal and a $1.5 billion gain from the acquisition of Silicon Valley Bank UK.
Revenue, or net operating income, came in at $20.8 billion, up 3% year on year, slightly below expectations, while net interest income fell 3.3% to $8.7 billion due to deposit migration, which was better than forecast.
Net interest margin of 1.63% was up 11 basis points from the fourth quarter of last year, which the lender said reflected the impact of hyperinflation and currency devaluation in Argentina, partly offset by higher funding costs of liabilities.
Expected credit losses of $720 million were recorded, $288 million higher than a year ago.
The common equity tier-1 capital ratio, a measure of the strength of a bank's asset base, increased to a robust 15.2% from 14.8%.
The new share buyback comes on top of $2 billion in share purchases announced in February, with a first interim dividend for 2024 of $0.10 per share, a special dividend of $0.21 per share from the Canada sale proceeds, making a total of $8.8 billion of shareholder distributions.
But, although some analysts saw the potential for an improved outlook, guidance was left unchanged.
Quinn said: "I'm pleased with our start to 2024. We completed the sale of our Canada business and agreed the sale of our Argentina business, both of which allow us to focus on markets with higher value international opportunities."
On his retirement, after nearly five years in the role, Quinn said: "It has been a privilege to lead HSBC. I never imagined when I started 37 years ago that I would have the honour of becoming group chief executive of this great bank."
The board said it has begun a formal process to find a successor, considering both internal and external candidates, with Quinn continuing in the role during the process to ensure an orderly transition.