HSBC’s group chief executive officer Noel Quinn is retiring after nearly five years in the role, announced the London-headquartered bank on the same day it released its business update for the first quarter ended March 2024.

On Tuesday (Apr 30), the bank said that its board has begun a formal process to find a successor and that it was considering both internal and external candidates for the role.

Quinn will remain as group chief executive during this process to “ensure a smooth and orderly transition”, it added.

He has agreed to remain available through to the end of his 12-month notice period, which expires on Apr 30, 2025.

Since he took up the role in 2019 after joining the bank in 1987, Quinn has been credited for simplifying and focusing the bank – most recently with the sale of HSBC’s Canada and Argentina operations – as well as building a “leading position on sustainability”.

The outgoing chief said that he intends to “pursue a portfolio career” in the future.

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“After an intense five years, it is now the right time for me to get a better balance between my personal and business life,” he added.

Upon his departure, Quinn will be eligible to be considered for an annual incentive award for FY2024.

HSBC disclosed that he was granted a “good leaver” status – meaning that he is entitled to receive any deferred awards and long-term incentive awards on a prorated basis until his successor’s appointment takes effect.

He will not be eligible for a long-term incentive award for FY2024. 

Rising costs weigh on Q1 profit

Separately, the bank also reported a profit after tax of US$10.8 billion for the first quarter ended March, down 1.7 per cent from US$11 billion in the same period last year.

For the quarter, HSBC registered 2.9 per cent higher revenue of US$20.8 billion versus US$20.2 billion in Q1 FY2023.

The revenue growth included a US$4.8 billion one-off gain on disposal, and was also attributed to higher wealth revenue in the wealth and personal banking segment, notably from global private banking as well as higher revenue contributions from equities and securities financing in the global banking and markets sub-segment.

A US$1.1 billion impairment was recognised due to the group’s classification of its Argentina business as an asset held for sale. 

Over the quarter, HSBC also recognised a 66.7 per cent rise in expected credit loss charges of US$720 million, mainly comprising “stage 3” charges where the loans are considered credit-impaired. 

Operating expenses for the quarter grew 6.9 per cent year on year to US$8.2 million due to higher technology costs, the impacts of inflation, and an increased performance-related pay accrual relative to the prior year.

HSBC’s board has approved a first interim dividend of US$0.10 per share, along with a special dividend of US$0.21 per share payable in June 2024.

The special dividend follows the completion of HSBC’s sale of its banking business in Canada.

The group said that it also intends to initiate a share buyback programme of up to US$30 billion, which it expects to have a 0.4 percentage-point impact on its Common Equity Tier 1 (CET1) capital ratio. This is expected to “commence shortly” after the bank’s annual general meeting to be held in May 2024.

Quinn noted that the share buyback programme, together with its interim and special dividends, has brought the bank’s total announced distributions to US$8.8 billion. 

HSBC continues to target a return on average tangible equity (excluding the impact of notable items) to come in at the mid-teens for 2024, with banking net interest income of at least US$41 billion.

It reiterated its cost growth guidance of about 5 per cent for 2024 from 2023 levels, and expected credit loss charges as a percentage of average gross loans of around 40 basis points in 2024.

The bank said that it intends to manage its CET1 capital ratio within its medium-term target range of 14 to 14.5 per cent, with a dividend payout ratio target of 50 per cent for 2024, excluding material notable items and their related impacts.