by Anshuman Daga and Lawrence White
SINGAPORE (Reuters) – HSBC has named Georges Elhedery, its former head of investment banking, as its new chief financial officer, a move that surprises him Leaving eventually succeeds CEO Noel Quinn. I took six months off in January, citing a desire to travel with my family and explore personal interests.
Quinn told Reuters he was doing a good job restructuring the bank when he left CFO Evan Stevenson. Over the past three years, the move has been done with succession in mind — with the obvious effect of pushing Elhedery to the front of the queue.
Elhedery has been working on projects for Quinn since returning to HSBC in September. He is one of several Lebanese bankers who have risen to the top at HSBC, including his former head of investment banking, Samir Assaf.
The change comes as HSBC reports a slump in profits 42%, hit by rising loan losses and charges from the sale of its French business , the company sought to boost profits and appease a group of dissatisfied investors including its largest Ping An Insurance.
Hong Kong-listed HSBC, which generates most of its sales and profits in Asia, fell 2.5% in a strong broader market.
“These leadership changes will not result in a change in strategy,” Quinn 60 said. “It’s about how the group executive committee is positioned for potential future succession options,” Quinn told Reuters.
Stevenson 48 will be leaving the bank next year. “I’m looking forward to taking some time off and considering future options,” he told Reuters.
“There’s no question that Stevenson is doing well in the investor community,” analyst John Cronin said at Goodbody.
“His departure was definitely a surprise, and his top management smells of influence in terms of where HSBC is headed – it’s going to raise a lot of questions,” he said.
For the three months ended September, the bank reported a pre-tax profit of $3.22 $1 billion 22. That’s down from $5.4 billion a year ago, but well above the $2.2 billion average of analyst estimates compiled by the bank.
The results included a $2.4 billion loss from the sale of the bank’s operations in France, part of HSBC’s broader strategy to trim part of its once-global empire to boost profits.
HSBC’s net interest income increased 30% to $8.6 billion, the highest in eight years, mainly due to interest rates rise. Net interest margin rose to 1.48%, up 22 basis points from the second quarter.
HSBC is under pressure from shareholder Ping An to explore options including spinning off and listing its key Asian business to increase shareholder returns.
The bank is also exploring a potential sale of its Canadian unit as it tries to streamline operations to boost profits under pressure from Ping An.
“We remain on track to meet our cost targets and 2023,” CEO Quinn said.
In a performance statement, HSBC’s chief executive said the bank’s target was “to achieve at least from 2023 onwards) % return target and, therefore, a higher distribution to our shareholders”.
HSBC, the first major UK bank to report quarterly earnings, said quarterly results were affected by a $1 credit provision. $1 billion, compared with the release of 659 $1 million in cash reserves for expected credit losses in the same period last year.
Rising interest rates have traditionally boosted bank profits as they can get more money from loans than they pay depositors, but the current situation is overshadowed by the threat of a recession, This can result in huge losses for lenders.
HSBC reported Tuesday that its plan to attract long-suffering shareholders by increasing its dividend has hit a snag, saying it needs to raise its core capital level 42 .4% can only be resumed after repurchase and dividends are returned to 14%.
Quinn told Reuters he was “very confident” it could do this in the first half of next year by increasing revenue and overhead.