HSBC has said it will resume paying a dividend and invest more heavily in Asia despite announcing a 34% drop in annual profits after its global business was hit hard by the coronavirus pandemic.
Europe’s largest bank posted results slightly above analysts’ expectations in 2020 weighed down by loan losses, reporting pre-tax profit of $ 8.8 billion, up from $ 13.4 billion the year before.
He described his intention to invest around $ 6 billion in fast-growing markets in Asia, particularly in wealth management, and said he would grow “beyond Hong Kong” – its biggest market – including in mainland China and Singapore.
In the fourth quarter, adjusted profit slipped 50% year on year to $ 2.2 billion, just above the $ 1.8 billion estimated by analysts. At the same time, bad debt impairment charges climbed from $ 1.2 billion to $ 8.8 billion over the period. Adjusted pre-tax profits for 2020 fell 45% to $ 12.1 billion.
The bank said on Tuesday it would start paying a dividend of $ 0.15 per share after the Bank of England ban payments to shareholders was partially lifted at the end of last year.
“We’ve had a good start to 2021, and I’m cautiously optimistic for the year ahead,” HSBC chief executive Noel Quinn said in a statement.
Quinn and Chairman Mark Tucker are accelerating a radical overhaul of HSBC’s global operations to galvanize performance and win back skeptical investors, who have sold their stocks in recent years.
The bank is going transfer $ 100 billion in capital to Asia, relocate a chain of global business leaders from its UK headquarters to Hong Kong, cut 35,000 jobs in Europe and the United States, and to strengthen plans to become a market leader in wealth management in Asia. It is also in talks to close its retail banking presence in the United States.
This week, HSBC reshuffled its leaders before its results. On Tuesday, he announced he would also shake his board of directors with Laura Cha, president of Hong Kong Exchanges and Clearing, stepping down in May.
“In 2020, we experienced economic and social upheaval on a scale never before seen in living memory,” Tucker said. “The external environment was being reshaped by a range of factors – including the impact of US-China trade tensions, Brexit, low interest rates and rapid technological development.
“The spread of the Covid-19 virus has made this environment all the more complex and difficult.”
HSBC stock jumped 7% in Hong Kong on Tuesday. The stock has risen nearly 18% this year, but remains down more than a fifth from its pre-pandemic levels in early 2020.
HSBC grapples with geopolitical tensions between the West and China that have left the Hong Kong-based lender in a precarious position.
It was severely criticized by British MPs and US politicians for his approval of a controversial Beijing-imposed national security law on Hong Kong, and for closing accounts pro-democracy activists in the territory.
He has also been criticized by Chinese state media for providing information to US prosecutors that led to the arrest of a senior leader at the Chinese telecommunications group Huawei.