HSBC taps former investment bank chief as CFO; Q3 profits fall 42%

SINGAPORE, Oct 25 (Reuters) – HSBC (HSBA.L) named Georges Elhedery, a former chief of its investment bank, as its new chief financial officer in a surprise move as it reported profits slid 42% in the third quarter from rising loan losses and asset sales.

Elhedery’s sudden elevation to pole position to become the London-headquartered bank’s next chief executive comes after he took a six-month sabbatical from the bank in January, citing a desire to travel with his family and explore personal interests.

“There is no change in strategy as a consequence of these leadership changes,” Chief Executive Noel Quinn told Reuters. “This is about how the Group Executive Committee is positioned with potential succession options for the future”.

Elhedery, who since his return from sabbatical in September has been working on projects for Quinn, takes over from Ewen Stevenson, who will leave the bank next year, HSBC said.

“I am looking forward to some time off and thinking about future options,” Stevenson told Reuters.

The bank posted a pretax profit of $3.15 billion for the three months ended Sept. 30. That was down from $5.4 billion a year ago, but well above the $2.45 billion average of analyst estimates compiled by the bank.

The results included a $2.4 billion hit from the sale of the bank’s business in France, part of a wider strategy by HSBC to excise parts of its once globe-spanning empire to boost profits.

HSBC, which makes the bulk of its sales and profit in Asia, has come under pressure from Ping An Insurance Group (601318.SS), the Chinese firm that is its biggest shareholder, to explore options including spinning off and listing its mainstay Asia business to increase shareholder returns. read more

The bank is also exploring a potential sale of its Canadian unit, as it tries to streamline operations in order to lift profits amid pressure from Ping An.

“We remain on track to achieve our cost targets for 2022 and 2023,” said CEO Quinn.

HSBC’s CEO, who has been running the lender for more than two years, said in the results statement that the bank aimed to “deliver its returns target of at least 12% from 2023 onwards and, as a result, higher distributions to our shareholders”.

HSBC, the first big British lender to report quarterly earnings, said the quarterly performance was affected by credit provisions of $1.1 billion, compared with the release of $659 million of cash reserves set aside for expected credit losses in the same quarter a year ago.

Rising rates traditionally buoy bank profits as they can make more from lending than the sums they pay to savers, but the current picture is clouded by the threat of an economic downturn that could cause hefty losses for lenders.

HSBC on Tuesday reported a snag in its plan to woo long-suffering shareholders with increased payouts, saying it needs to boost its core capital level of 13.4% back above 14% before it can resume buybacks and dividends.

It said it would do this by the first half of next year by increasing revenue and managing costs.

Reporting by Anshuman Daga and Lawrence White; Editing by Kenneth Maxwell

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