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HSBC profit down 30 percent, declares dividend

2021-02-23 HKT 13:14
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  • Higher-than-expected credit losses and other bad debts are blamed for a 30 percent drop in HSBC's annual profit. Photo: Shutterstock
    Higher-than-expected credit losses and other bad debts are blamed for a 30 percent drop in HSBC's annual profit. Photo: Shutterstock
Cecil Wong reports
HSBC on Tuesday vowed to accelerate its Asia pivot despite spiralling tensions between China and the West after it reported a 30 percent plunge in profits for 2020 caused by the coronavirus pandemic.

Reported profit after tax came in at US$6.1 billion, which the bank blamed primarily on higher-than-expected credit losses and other bad debts.

Fourth-quarter profits were halved to US$2.2 billion but beat estimates, helped by the lender keeping costs down as part of a major restructuring it has already embarked on.

The banking giant declared an interim dividend of US$0.15 per share.

HSBC did not offer a dividend last year after British regulators urged banks to save capital.

The bank said it won't be paying quarterly dividends this year, but will consider whether to announce an interim dividend in August.

It added, "The Group will review whether to revert to paying quarterly dividends at or ahead of its 2021 results announcement in February 2022."

Profit before tax for its Hong Kong business fell 32 percent year on year to US$8.2 billion.

The latest results came as HSBC published a new strategy laying out plans to speed up its attempt to seize more of the Asian market, the region of the world where the Europe's largest lender makes most of its profits.

The strategy will see the London-headquartered bank plough some US$6 billion into shoring up operations across Asia, with a particular focus on targeting wealth management in the increasingly affluent region.

It said it aims to become a leader in wealth management, with an emphasis on Asia and the Middle East.

The bank made specific mention of markets in Southeast Asia such as Singapore, as well as China and Hong Kong.

"We plan to focus on and invest in the areas in which we are strongest," CEO Noel Quinn said in a statement.

According to Bloomberg and the Financial Times, the bank is planning to move three of its top executives from London to Hong Kong in the coming months as it looks set to go all in on the SAR.

The trio collectively head up wealth and personal banking, global banking and markets and global commercial banking.

Bloomberg said the move would mean businesses responsible for some 95 percent of net revenue will soon be run out of Hong Kong.

The global economic slowdown caused by the virus has hit financial giants hard.

But HSBC has a further headache – soaring geopolitical tensions via its status as a major business conduit between China and the West.

As a result, it has found itself more vulnerable than most to the crossfire caused by the increasingly frayed relationship between China and western powers, especially after Beijing imposed what some see as a draconian security law on Hong Kong last year.

"As geopolitical tensions rise, the compliance by multinational corporations with their legal or regulatory obligations in one jurisdiction may be seen as supporting the law or policy objectives of that jurisdiction over another, creating additional reputational and political risks for the Group," the bank said.

Quinn struck a cautiously positive note on the way forward.

"The geopolitical uncertainty that prevailed during 2020 remains a prominent feature of our operating environment," he said. "We are hopeful that this will reduce over the course of 2021, but mindful of the potential impact on our business if levels remain elevated." (RTHK/AFP)
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Last updated: 2021-02-23 HKT 14:31