HSBC expects to increase dividend

HSBC Holdings says it will pay a higher dividend this year, allaying shareholders' concerns that its payout will remain flat because of capital needs under tougher regulatory requirements.

"We have actually increased dividend every year since 2009. So we are confident the dividend will be progressive, or higher than the previous year, based on what we know today," chief executive Stuart Gulliver told shareholders at an informal meeting in Hong Kong yesterday.

HSBC has been a consistent dividend outperformer in the past few years. It has raised both the absolute amount of dividend as well as its payout ratio, or the percentage of earnings paid to shareholders, since at least 2011.

In 2011, the bank paid shareholders 43 per cent of its earnings per share, or 39 US cents. Last year, the payout ratio was raised to 57 per cent with 48 US cents - at the top end of its payout ratio guidance of 40 to 60 per cent.

However, some analysts are expecting a flattish dividend because of weaker revenue growth and potential capital needs.

Morgan Stanley said in an April 28 note that it expected the lender to pay 49 US cents per share this year and 47 US cents next, citing a slowdown in revenue growth in emerging markets.

HSBC generates more than half of its profits from emerging markets.