Financial News
Author: Hu Xueneng
2021-02-23 12:05
Last update date: 2021-02-23 13:02
HSBC Holdings (0005) announced its full-year results as of the end of last year. The profit after tax on the accounting basis was US$6.1 billion, a 30% drop.
The profit attributable to ordinary shareholders of the parent company was US$3.898 billion, down 34.7% year-on-year.
The group stated that after considering the provisional policy of the UK Prudential Regulation Authority ("Prudential Regulation Authority") regarding distribution to shareholders in 2020, the board of directors announced a dividend for 2020. Each ordinary share is US$0.15 in cash, and no share Scrip selection.
The dividend is resumed this time, at an equivalent of HK$1.17.
The current price is HK$48.05, which translates to a dividend yield of approximately 2.43%.
When talking about the repurchase policy, the group stated that in the long run, if there is no urgent investment opportunity for capital redeployment, it will consider repurchasing shares, but not in the short term.
This year, no quarterly dividend will be considered for the semi-annual results.
In December 2020, the Prudential Regulation Authority announced that it intends to resume the standardization of capital requirements and shareholder distribution in 2021.
As far as dividends for 2021 are concerned, the Prudential Regulation Authority accepts the arrangement of calculating in an appropriate and prudential manner, but not paying dividends, and plans to make further announcements before the announcement of the 2021 semi-annual results of major UK banks.
For this reason, the group will not pay quarterly dividends in 2021, but will consider whether to declare a dividend when it announces its 2021 semi-annual results in August.
The group will announce its 2021 annual results in February 2022 or conduct a review before deciding whether to resume quarterly dividends.
The board of directors has adopted a sustainable dividend policy for future dividends.
We plan to transition the target payout ratio to between 40% and 55% of the basic earnings per ordinary share from 2022, and we can flexibly adjust every non-cash major item (such as goodwill or impairment of intangible assets). Stock earnings.
If, due to the lack of attractive investment opportunities, the group is unable to invest idle capital and becomes over-capitalized, the dividend policy can be supplemented through share repurchases or special dividends.
HSBC said it will not consider repurchasing shares in the short term.
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Expected credit losses soared 2.2 times
HSBC’s accounting benchmark expected credit loss for the whole year of last year was US$8.817 billion, an increase of 2.2 times or US$6.1 billion from the 2.756 billion in 2019, which mainly reflects the impact of the novel coronavirus outbreak and weaker future economic prospects.
The expected credit loss provision for customer loans has increased from US$8.7 billion on December 31, 2019 to US$14.5 billion on December 31, 2020.
The reported revenue during the period was US$50.4 billion, a year-on-year decrease of 10%; the accounting basis profit before tax was US$8.8 billion, a decrease of 34%.
Adjusted revenue was US$50.4 billion, down 8%; adjusted profit before tax was US$12.1 billion, down 45%.
Last year's net interest margin fell by 26 basis points to 1.32%
According to the group, affected by the decline in global interest rates, last year's net interest margin was 1.32%, a decrease of 26 basis points from 2019.
On December 31 last year, the group's common equity Tier 1 capital ratio was 15.9%, an increase of 1.2 percentage points year-on-year.
Risk-weighted assets were US$857.52 billion, an increase of 1.67% year-on-year.
During the period, the dividend per common share was 15 US cents, a year-on-year decrease of 50%.
Last year, the average return on tangible equity was only 3.1%, a year-on-year decrease of 5.3 percentage points.
HSBC’s benchmark expected credit loss for the entire year of last year soared to US$8.817 billion, reflecting the impact of the outbreak and weaker future economic prospects.
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As for the fourth quarter of last year, profit after tax on the basis of accounting was US$900 million, an increase of US$6 billion, and profit before tax on the basis of accounting was US$1.4 billion, an increase of US$5.3 billion, mainly due to item 73 in the fourth quarter of 2019. The $100 million impairment of goodwill no longer reappears.
Adjusted profit before tax was 2.2 billion US dollars, down 50%.
Baseline revenue fell 12% during the quarter, while adjusted revenue fell 14%, mainly due to the global low interest rate environment.
The net interest margin for the fourth quarter of 2020 was 1.22%, an increase of 2 basis points from the third quarter of the same year.
The accounting benchmark expected credit loss was US$1.2 billion, an increase of 60%, reflecting the uncertainty of the UK’s economic outlook and the increase in relevant provisions for specific risk exposures in the industrial and commercial finance business.
The benchmark operating expenses for the quarter were US$9.9 billion, down 42%, because a US$7.3 billion impairment of goodwill no longer reappeared.
Adjusted operating expenses were US$9.1 billion, a decrease of US$100 million.
The target payout ratio will be set at 40% to 55% from next year
The group stated that it intends to strengthen its focus on areas that it does best, expand and accelerate investment, and continue to transform its underperforming businesses.
In order to achieve climate goals, a series of plans have also been formulated to seize the opportunities brought about by the transition to a low-carbon economy.
The Group continues to work to control the adjusted cost base at US$31 billion or less in 2022, reflecting that the Group is further reducing costs. However, the weakening of the US dollar at the end of 2020 has adversely affected currency conversion, which roughly offset the effect.
In addition, it continues to work to reduce the total value of risk-weighted assets by more than US$100 billion by the end of 2022.
In terms of return on average tangible equity, the group no longer expects to achieve the original target of 10% to 12% in 2022.
The current medium-term target of return on average tangible equity is set at 10% or above.
The group intends to maintain the common equity tier 1 ratio above 14%, and maintain it between 14% and 14.5% in the medium term. In the long run, the target will be lowered.
The board of directors has adopted a policy aimed at sustainable dividends in the future.
Starting from 2022, the group plans to gradually set the target payout ratio between 40% and 55% of the earnings per common share on the basis of accounting, and can be flexible on non-cash major items (such as goodwill or impairment of intangible assets) Adjusted earnings per common share.
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