HSBC CEO unveils plans for special dividend in H1 2024
HSBC Holdings plc has published statements by Group Chairman, Mark Tucker and Group Chief Executive, Noel Quinn made in connection with HSBC’s Annual General Meeting to be held today.
Noel Quinn noted the planned sale of HSBC’s banking operations in Canada as it gives the company an opportunity to reward its shareholders for their patience and the trust they have had in HSBC.
Noel Quinn said:
“We intend to consider the payment of a special dividend of 21 cents per share in the first half of 2024 as the first priority use of the proceeds from that transaction, once it closes.
And once we close the Canada transaction, we will decide how much of the remaining proceeds – after the special dividend – we retain within the business, and how much we will return to shareholders via buybacks.
But I want to emphasise that the special dividend and any additional buybacks relating to Canada would be over and above our normal plans for dividends and buybacks”.
With respect to Resolutions 16, 17 and 18, HSBC CEO stressed that the Board considered them fully, but strongly recommends to all shareholders that they vote against them.
HSBC Chairman said that Resolutions 17 and 18 are new and were tabled by a group of shareholders represented by Mr Lui Yu Kin.
They propose strategy and structural reviews for HSBC and to restrict the Board’s ability to set the dividend.
On Resolution 17, Mr Quinn said the Board considered alternative structural options last year. According to Noel Quinn, HSBC’s analysis clearly demonstrated that such options would destroy value and put dividends at risk.
That conclusion has not changed.
Noel Quinn added:
“On Resolution 18, I do not believe that fixing the dividend at an absolute level is financially sensible, prudent or workable, particularly for a bank such as HSBC which is systemically important for the UK, Hong Kong and the global financial system
A dividend payout ratio is a much more balanced approach that aligns dividends to the level of profit generated. This model is widely used across the financial services industry and other industries for good reason”.
These remarks were apparently targeted at Ping An’s letter which was strongly critical of certain aspects of HSBC’s business strategy.