HSBC earnings sink by 54pc to US$1.3b, aims to pay 'conservative dividend' if possible

British bank HSBC, which is facing greater geopolitical risks and headwinds from lower global interest rates, reported today third quarter net profit sank by 54 percent to US$1.35 billion from US$2.97 billion the year before.

HSBC Group Chief Executive, Noel Quinn, said the bank aims to pay "a conservative dividend if  circumstances allow.''  He said that "a decision on whether to pay a dividend for the 2020 financial year will depend on economic conditions in early 2021, and be subject to regulatory consultation.''

On March 31, HSBC Holdings said it will halt dividend payments following a notice from the Bank of England through the Prudential Regulation Authority, to not pay, the fourth interim dividend for 2019. 

The bank canceled the fourth interim dividend of US$0.21 per share, which was scheduled to be paid on April 14.

The decision caused widespread disappointment among many retail investors in Hong Kong

Similar requests were made to other UK incorporated banking groups by the UK regulator.

HSBC reported  post-tax profit tumbled by 46 percent to US$2.03 billion from US$3.79 billion.

Quinn, said the financial results were “promising'' viewed against a backdrop of the continuing impacts of the coronavirus on the global economy.

“I'm pleased with the significantly lower credit losses in the quarter, and we are moving at pace to adapt our business model to a protracted low interest rate environment. We are accelerating the transformation of the group, moving our focus from interest-rate sensitive business lines towards fee-generating businesses, and further reducing our operating costs.''

Revenue fell by 10 percent to US$12.06 billion from  US$13.34 billion the year before.

Net interest income fell by 15 percent, or US$1.1 billion to US$6.5 billion from the year-before quarter, due to HIBOR reduction in the third quarter, the bank reported.

Expected credit losses and other credit impairment charges fell by US$100 million to US$800 million.