Shares of HSBC after H1 2019 earnings, CEO John Flint stepping down

John Flint, chief executive officer of HSBC Holdings, at the World Economic Forum (WEF) in Davos, Switzerland on Jan. 24, 2019.

Jason Alden | Bloomberg | Getty Images

Shares of HSBC, Europe’s largest bank by assets, fell more than 1% in Hong Kong on Monday, after the surprise announcement of Chief Executive Officer John Flint’s departure.

The bank’s chairman, Mark Tucker, said in a statement: “In the increasingly complex and challenging global environment in which the Bank operates, the Board believes a change is needed to meet the challenges that we face and to capture the very significant opportunities before us.”

Tucker said the bank has no fixed timeline to appoint a new CEO, but the search could take six to 12 months. Until then, Noel Quinn, the head of the bank’s global commercial banking unit, will be interim CEO, HSBC said in the statement.

Flint took over as HSBC CEO in February 2018. He set out plans to invest $15-$17 billion over three years in areas including technology and China, while trying to keep costs under control.

His surprise departure will leave investors wondering whether there will be any change in the bank’s strategy, said Joshua Crabb, senior portfolio manager at asset management firm Robeco.

“When you get a change of this magnitude, people are going to be looking for what are the reasons, what should be expected if there’s any change in strategy,” Crabb told CNBC’s “Squawk Box” on Monday.

“So, I think what we’ll expect will be quite a lot of attendance when we have the analyst briefing and people will be trying to understand the change in strategic direction for the bank,” he added.

The bank is scheduled to hold a conference call with investors and analysts at 2:30 p.m. HK/SIN on Monday to discuss its first-half 2019 financial results.

HSBC earnings

The bank released its latest earnings report along with the announcement of Flint stepping down. The lender said profit before tax rose 15.8% year-on-year to $12.4 billion in the first six months of 2019, while revenue for the same period was 7.6% higher than the year before at $29.3 billion.

Other financial metrics that analysts and investors were watching:

  • Net interest margin, a measure of lending profitability, was 1.61% — lower than the 1.66% in June 2018.
  • Earnings per share was $0.42, an increase from $0.36 a year ago.

HSBC declared a share buyback of $1 billion, defying some analysts’ expectations it might pause its strategy of returning extra capital to investors.

Ronald Wan, non-executive chairman of financial services firm Partners Financials Holdings, said HSBC’s latest set of results was “really good.” Still, investors should be cautious before buying the stock, he said.

“We need to watch what will be happening in Hong Kong and what will be happening in Britain with Brexit (which) will have an impact on the bank’s corporate earnings in the second half of this year,” Wan told CNBC’s “Street Signs” on Monday.

HSBC is headquartered in London but derives much of its revenue in Asia, particularly in Greater China.

— Reuters contributed to this report.

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