HSBC to resume dividends as soon as possible

Business | Kevin Xu and Reuters 19 Jan 2021

HSBC (0005) hopes to resume dividend payments as soon as possible, chairman Mark Tucker said at the Asian Financial Forum yesterday.

This came after Bank of England allowed British banks to resume paying dividends in December as the financial stability impact of coronavirus had become clearer.

The Prudential Regulation Authority "judges that an extension of the exceptional and precautionary action taken in March is not necessary and that there is scope for banks to recommence some distributions should their boards choose to do so, within an appropriately prudent framework," the regulator said in a statement.

"Notwithstanding the impact of the Covid-19 pandemic on the global economy, banks remain well capitalised and are expected to be able to continue to support the real economy through this period of disruption."

For 2021 dividends the PRA is content for appropriately prudent dividends to be accrued but not paid out and aims to provide a further update ahead of the 2021 half-year results of large UK banks, the BoE said.

Morgan Stanley expects HSBC could pay a dividend of as much as 22 US cents per share in 2021, while Standard Chartered's (2888) dividend payment could reach 21 US cents.

If the Bank of England allows the banks to resume dividend distribution, it is expected that of the two major British banks HSBC will have dividend yields of 2.77 percent in 2020 and 4.07 percent in 2021, the report from Morgan Stanley noted. As for Standard Chartered, the dividend yields are expected to be 2.68 percent in 2020 and 3.33 percent in 2021.

The BoE told Britain's seven biggest lenders in March to suspend dividends and share buy-backs until the end of 2020, and to cancel payments of any outstanding 2019 dividends.

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