In key news on UK stocks, HSBC Holdings PLC (GB:HSBA) gained 1.7% on Thursday after the bank’s chairman, Mark Tucker, confirmed that the spin-off of its Asia business remains off the table, Reuters reported. In an informal shareholders meeting held yesterday in Hong Kong, Tucker stated that there is no inclination among the bank’s shareholders to support a spinoff, and it is not going to occur.
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Tucker also hailed the bank’s strong performance in 2023, stating it was the best in the last 10 years. HSBC reported a 78% year-over-year increase in its pre-tax profits to $30.3 billion in 2023 and unveiled a new share buyback initiative of up to $2 billion. Based on record profits, the board approved a Q4 interim dividend of $0.31 per share, bringing the total 2023 dividend to $0.61 per share, marking the highest payment since 2008.
Shareholder Pressure on HSBC
In 2022, HSBC’s Chinese shareholder, Ping An Insurance Company of China (HK:2318), urged the bank to divide its operations into Asia and the rest of the world. Ping An, which holds approximately 8.2% of HSBC, contended that this move will deliver greater value to shareholders. However, in May 2023, HSBC blocked a resolution put forward by shareholders based in Hong Kong, supported by Ping An, aiming to potentially spin off its profitable Asia business.
HSBC’s Shift: Emphasizing Asia Growth
Under pressure from Ping An, HSBC’s divestment initiatives have gained momentum. With the majority of its profits originating from Asia, the bank remains committed to prioritizing core operations in this region, scaling back its global operations.
Consequently, it is reviewing its businesses in approximately 12 countries to pursue greater growth opportunities in Asia. Most recently, in December 2023, the bank announced the sale of its Canadian business to Royal Bank of Canada (NYSE:RY).
Is HSBC a Good Share to Buy?
Today, analyst Anke Reingen from RBC Capital reiterated a Buy rating on HSBC stock, predicting an upside of 13.3%.
According to TipRanks consensus, HSBA stock has received a Hold rating based on six Buy, five Hold, and three Sell recommendations. The HSBC share price target is 744.26p, which is 16.29% above the current trading level.
