Banking giant HSBC reported that its profit increased by $ 1.5 billion after the acquisition of the British business of the Silicon Valley Bank.
One of the largest financial institutions in Europe reported that in the period from January 1 to the end of March this year, its profit amounted to $ 12.9 billion. This financial result is more than three times higher than the indicator for the same period last year.
In March, HSBC bought SVB UK for a nominal sum of 1 pound sterling ($1.25). This deal was realized with the participation of the British government and the Bank of England. The lender, which is headquartered in London, said that its financial performance includes a preliminary profit of $1.5 billion from the purchase of SVB’s regional business.
HSBC Executive Director Noel Quinn says that the bank aims to further increase the efficiency of its activities, including in terms of financial results, and maintain budget discipline. He also noted that the lender regards investing in SVB UK as a way to accelerate the process of implementing growth plans.
The financial institution received support after the cancellation of the intention to write off $ 2.1 billion in connection with the sale of the French business. This deal may never be realized.
HSBC also announced its first quarterly payout to shareholders since the coronavirus pandemic began. The financial institution intends to buy back its shares with a total value of $ 2 billion.
The previously planned sale of the lender’s Canadian business is likely to be postponed. The value of this deal is $ 10 billion. Initially, this process was supposed to be completed by the end of 2023, but the bank’s new plans envisage the completion of the sale of the business to Canada at the beginning of next year. The deal will be implemented as part of the financial institution’s strategy to exit slow-growth Western markets.
The high performance of HSBC was recorded against the background of the crisis in the banking industry. After the collapse of Silicon Valley Bank and Signature Bank and UBS’s purchase of rival Credit Suisse, the situation in this area began to develop according to a negative scenario.
In recent months, HSBC has been under pressure from its largest shareholder, Chinese insurance giant Ping An. The Chinese side calls on the lender to abandon the division in Asia so that investors increase profits from the business in this region.
HSBC is still run from its London headquarters, but the bulk of the profits come from Asia. Thanks to these funds, the lender has the opportunity to subsidize some unprofitable operations in the United States and Europe. The Chinese side insists on the unfairness of this state of affairs and believes that Asian investors should get a larger share of profits.
Kenny Wen, head of investment at KGI Asia in Hong Kong, says that the value of HSBC shares over the past eight years does not indicate the effectiveness of Ping An investments. He also assumes that the decision of the financial institution to abandon the Asian division will increase the value of the bank for shareholders in this region.
HSBC is calling on shareholders to vote against the closure of the division in Asia at the annual general meeting to be held in Birmingham on May 5.
As we have reported earlier, HSBC Grants Its First Green Loan in Hong Kong.