HSBC (HSBA.L) will resume its interim dividend payout as profits at the bank rebound strongly.
HSBC said on Monday it would pay an interim cash dividend of $0.07 per ordinary share. The bank paid no interim dividend last year as COVID-19 and a ban on payouts from regulators led to a lean year for investors.
The bank said it now expects to hit is target dividend payout range of between 40% and 55% of earnings by the end of this year.
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The resumption of the half-year dividend came as HSBC reported rapidly rebounding profits. Pre-tax profit at the bank rose by $6.5bn (£4.7bn) to hit $10.8bn in the first six months of 2021. HSBC was boosted by the release of $700m from loss provisions, as the global economic outlook improved. The bank was also helped by a strong performance at UK franchise.
Rising profits came despite a 4% drop in revenues to $25.6bn. The fall reflected tough comparable numbers at HSBC’s markets and investment banking division.
“These are good results that reflect the return of growth in our main markets and marked progress in the execution of our strategy,” chief executive Noel Quinn said in a statement.
“We were profitable in every region in the first half of the year, supported by the release of expected credit loss provisions. Our lending pipeline began to translate into business growth in the second quarter and we further strengthened that pipeline during the half. This performance enables us to pay an interim dividend for the first six months of 2021.”
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Quinn is currently overhauling the bank and announced an acceleration of its transformation plan in February. Quinn said he was “pleased with the momentum”. HSBC is pivoting to Asia and more fee-generating businesses such as wealth management. The bank plans to axe 35,000 jobs by 2022 as part of the overhaul.
Costs rose 3% in the first half of 2021. Bankers earned bigger bonuses as profitability at the bank improved.
HSBC said there were “continued revenue headwinds” due to COVID-19, low interest rates, and more normal market conditions in business lines like fixed income trading. However, the bank said there were “emerging signs of unsecured personal lending and commercial lending growth”.
HSBC’s results follow similar bumper numbers from rivals Barclays (BARC.L), Lloyds (LLOY.L), and NatWest (NWG.L) Group last week. All three announced plans to resume interim dividends and profits soar.
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