The HSBC UK headquarters is seen at the Canary Wharf financial district of London on July 31, 2018. (TOLGA AKMEN / AFP)

SINGAPORE - HSBC pushed back on a proposal by top shareholder Ping An Insurance Group Co to split the lender, a move Europe's biggest bank said would be costly, while posting profit that beat expectations and promising chunkier dividends.

Some investors have come out in support of a proposal by Ping An for HSBC to explore strategic options such as spinning off its mainstay Asian business to unlock greater shareholder value

London-headquartered HSBC on Monday raised its target for return on tangible equity to at least 12 percent from next year compared with a 10 percent minimum flagged previously. It said it intends to revert to paying quarterly dividends from the start of 2023.

HSBC's shares rose nearly 7 percent in early London trade on Monday, making it the best performer in the benchmark FTSE 100 index.

"We understand and appreciate the importance of dividends to all of our shareholders. We will aim to restore the dividend to pre-COVID-19 levels as soon as possible," Chief Executive Noel Quinn, who has been running HSBC for more than two years, said in the results statement.

Dividends have been a focus for HSBC investors, especially its small shareholders in Hong Kong, after the lender cancelled its payout in 2020.

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Some investors have come out in support of a proposal by Ping An for HSBC to explore strategic options such as spinning off its mainstay Asian business to unlock greater shareholder value. 

HSBC said it is accelerating the restructuring of its US and European businesses, and will rely on its global network to continue to drive profits

In its most direct comments yet to calls for the break-up, HSBC said a demerger or spinoff of its Asian business risks huge one-off execution costs, higher taxes, ongoing running costs for the bank and potential regulatory setbacks.

The bank did not directly make a reference to Ping An's call for splitting the bank but, in an implied rebuttal to the mainland's insurer, said it is accelerating the restructuring of its US and European businesses, and will rely on its global network to continue to drive profits.

"Our strength as a well connected, global institution is the main reason our wholesale clients choose to bank with us and we are determined to capitalise on the advantages our network gives us," Quinn said in an earnings statement.

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In this file photo taken on Aug 3, 2020, a HSBC logo is pictured on a wall outside a branch of the bank in central London. (DANIEL LEAL / AFP)

HSBC posted a pretax profit of $9.2 billion for the six months ending June 30, down from $10.84 billion a year ago but beating the $8.15 billion average estimate of analysts compiled by the bank

Earnings beat

Dual-listed HSBC has shared the findings of a review by external advisers into the validity of its strategy with its board, but will not publish them externally, Quinn said.

HSBC posted a pretax profit of $9.2 billion for the six months ending June 30, down from $10.84 billion a year ago but beating the $8.15 billion average estimate of analysts compiled by the bank.

Quinn, under whose leadership HSBC has ploughed billions into Asia to drive growth, said the upgraded guidance and results validated the bank's international strategy.

Asia's share of profit went up to 69 percent in the first half from 64 percent a year ago.

We understand and appreciate the importance of dividends to all of our shareholders. We will aim to restore the dividend to pre-COVID-19 levels as soon as possible.

Noel Quinn, HSBC's Chief Executive

"Look at the half-year results, and you'll see the value of the current strategy," he told Reuters on Monday.

Ping An, which has not confirmed or commented publicly on the HSBC proposal, owns around 8.3 percent of HSBC's equity. A spokesperson at Ping An declined to comment on HSBC's results and its strategy.

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HSBC said it would pay an interim dividend of $0.09 per share. It also said stock buybacks remain unlikely this year.

It reported a $1.1 billion charge for expected credit losses, as heightened economic uncertainty and rising inflation put more of its borrowers into difficulties.