BUSINESS LIVE: HSBC boss Quin to retire; Whitbread hikes divi; Metro Bank deposits grow

Matt Britzman, equity analyst at Hargreaves Lansdown:

‘HSBC has thrown a spanner in the works. News that CEO Noel Quin plans to retire came as a surprise. Change at the top usually causes a wobble, more so when it’s unexpected, and this does raise some questions about how the strategy will evolve from here.

‘The HSBC portfolio is going through a reshuffle, and Quin’s far from completing his mission to get costs under control.

‘He took the reins just as the pandemic was spreading across the world, a hugely uncertain time to lead a global bank and pivot away from its more traditional markets.

‘He’s also had to navigate geopolitical tensions between the US and China, political unrest in Hong Kong, and plenty of shareholder challenges. He may be a hard act to follow, but market reaction suggests the strong position he leaves behind is enough to quell any uncertainty about who’ll lead the business from here.

‘Looking at the results, there was, as usual, a lot to unpack. The Canadian sale has been completed, meaning the special dividend is being released as expected. HSBC is moving forward with plans to ditch the Argentina business and has taken a $1.1bn hit in the process of reclassifying it for account purposes. This is all part of the ongoing strategy to shift away from non-core areas and focus more on Asia which is where investors see the most potential.

‘Strip out some of the one-off items, and underlying performance was better than expected. As we’ve seen across the banking sector, impairment charges came in lower than analysts had forecast.

‘That’s particularly good news for HSBC, whose Chinese exposure has caused some issues in recent quarters. The lack of any material write-downs or impairments relating to Chinese commercial real estate is welcome.’

Metro Bank posted a 4 per cent increase in total deposits for the first quarter, thanks to the campaign it launched late last year to make up for significant withdrawals by customers amid reports on its financial health.

The British lender struck a £925million rescue deal in October in the wake of volatile trading and has since implemented cost cuts to heal its balance sheet.

Total deposits rose to £16.21billion in the three months to 31 March, from £15.62billion iin the previous quarter.

Metro, launched to challenge the dominance of Britain’s big banks, said its lending activity was down 4 per cent, as it shifts focus to higher margin specialist mortgages and commercial lending.

‘The significant levels of liquidity raised in Q4 2023 now enable the group to focus on low-cost relationship deposits to manage down the cost of funding,’ the company said in a statement.

The underlying service-led core deposit franchise increased by more than 50,000 personal and business current accounts in the quarter.

‘We remain confident that financial results will continue to improve throughout 2024 as we optimise funding, deliver on cost savings, continue our asset rotation and benefit from lower yielding fixed rate treasury and mortgage maturities,’ boss Daniel Frumkin said.

Tesla shares surged yesterday as Elon Musk moved a step closer to launching self-driving cars in China

In a much-needed boost, the electric vehicle maker’s billionaire boss struck a navigation deal with Chinese tech firm Baidu.

Premier Inn owner Whitbread has hiked its final dividend by 26 per cent to 62.9p after posting a 36 per cent surge in annual profit, buoyed by strong booking for its hotel chains in the UK.

Premier Inn UK delivered record adjusted profit before tax with a 15.5 per cent return on capital employed, Whitbread said, and it ‘continues to outperform the UK midscale and economy market’.

Whitbread has also announced plans to launch a share buyback worth £150million.

Chief executive Dominic Paul said:

‘We have delivered an outstanding set of results in FY24, led by the strength of our UK hotels business.

‘Our increased levels of profitability, operating cashflow and return on capital reflect the power of our unique operating model.

‘Our freehold-backed balance sheet, together with our strategy of continuing to invest, is allowing us to take advantage of the significant structural growth opportunity that exists following the decline in UK hotel supply.’

Vinted has turned its first annual profit as it cashes in on young shoppers shunning fast fashion.

The Lithuanian start-up – Europe’s largest website for buying and selling old clothes – made £15.4million last year after a £17million loss in 2022.

Sales surged 61 per cent to £509million after it launched a service to verify high-end brands. Business was also boosted by an expansion into Denmark and Finland last year, and its takeover of design program Rebelle.

HSBC chief executive Noel Quinn will exit after five transformational years in the role, the lender said on Tuesday as it posted a forecast-beating pre-tax profit of $12.7billion for the first three months of 2024.

Quinn oversaw a sweeping series of asset sales across the globe during his tenure, getting rid of or slashing in size underperforming businesses, including the lender’s retail banking businesses in the US and France, its entire Canadian subsidiary and units in smaller markets such as Argentina.

HSBC’s shares, which have gained roughly 30 per cent during his tenure, were up by about 1.3 per cent and touched a nine-month high in the afternoon session in Hong Kong.

Quinn will remain CEO until his successor starts in the role, and has agreed to remain available through to the end of his 12-month notice period expiring on April 30, 2025, to support the transition.

‘I’ve held intensive leadership roles since I took on a commercial bank role in October 2008 so I’m personally ready for a change,’ Quinn told reporters on a conference call.

‘It’s also a natural inflection point for the bank, as it comes to the end of the current transformation phase. It’s an ideal time to bring in leadership to move the bank forward over the next five years.’

HSBC Chairman Mark Tucker said the bank was aiming to complete Quinn’s succession process by second half of this year.