PIAIF - HSBC stock advances after plans to reinstate dividend guidance improves

HSBC Holdings ( NYSE: HSBC ) stock is climbing 7.3% in U.S. premarket trading after the U.K-based bank with strong operations in Asia said it plans to reinstate quarterly dividends from 2023 and bolstered some of its guidance. In addition, the company pushed back against shareholder Ping An Insurance's ( OTCPK:PNGAY ) ( OTCPK:PIAIF ) campaign to break apart the company.

Cost controls are on track to reach the high end of its $5B-$5.5B target range and the bank is increasingly confident in achieving higher returns, according to its Q2 earnings slides.

In considering a number of options for its Asian business, including a de-merger, HSBC ( HSBC ) CEO Noel Quinn said such structural changes would risk "diluting the economics of our international business model." It would also drive "material valuation loss" through additional cost and capital factors.

By contrast, a consulting firm retained by Ping An ( OTCPK:PNGAY ) said in June a breakup could generate an additional $26.5B in returns.

"We still have more work to do in the second half of this year," Quinn said . "But we are now much better positioned to meet the needs of our international customers and to deliver higher returns for our shareholders."

HSBC ( HSBC ) now targets reported return on tangible equity of 12% from 2023 onwards, up from its previous target of at least 10% by 2023. It expects net interest income of at least $31B in 2022 and $37B in 2023 if , up from the $26.5B.

It also expects mid-single digit percentage loan growth in 2023.

Its dividend payout ratio is expected to be ~50% for 2023 and 2024, up from its previous target of about 40%-55%.

In Q2, adjusted profit before tax of $5.97B increased 13% Y/Y.

Net interest income of $7.47B increased 13% Y/Y, primarily from higher rates and balance sheet growth. Adjusted NII rose 20% Y/Y. Noninterest income of $5.68B rose 2%.

Customer loans of $1.03T increased 1% from Q1 and customer deposits were roughly flat.

Q2 RoTE, annualized, increased to 9.9% from 9.4% in the year-ago quarter.

Earlier, HSBC Holdings ( HSBC ) reports Q2 results, to resume quarterly dividend payouts

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