HSBC will resume paying a dividend despite announcing a 34 per cent drop in annual profits after its global business was hit hard by the coronavirus pandemic.
Europe’s largest bank performed slightly above analysts’ expectations in 2020 although it was weighed down by loan losses, reporting profit before tax of $8.8bn, down from $13.4bn the previous year.
In the fourth quarter, adjusted profit slid 50 per cent year on year to $2.2bn, just above the $1.8bn estimated by analysts.
The bank said on Tuesday that it would start paying a dividend of $0.15 a share after a Bank of England ban on shareholder payouts was partially lifted late last year.
“We have had a good start to 2021, and I am cautiously optimistic for the year ahead,” Noel Quinn, HSBC chief executive, said in a statement.
Quinn and chairman Mark Tucker are accelerating a radical overhaul of HSBC’s global operations in order to galvanise performance and win back sceptical investors, which have sold out of the stock in recent years.
The bank will shift $100bn of capital to Asia, relocate a string of senior global business heads to Hong Kong, cut 35,000 jobs in Europe and the US, and boost plans to become a market leader in wealth management in the region. It is also in talks to close down its US retail banking presence.
“In 2020, we experienced economic and social upheaval on a scale unseen in living memory,” Tucker said. “The external environment was being reshaped by a range of factors — including the impact of trade tensions between the US and China, Brexit, low interest rates and rapid technological development.”
“The spread of the Covid-19 virus made that environment all the more complex and challenging.”
HSBC shares rose 3.3 per cent in Tuesday morning trading in Hong Kong prior to the earnings release.