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HSBC restores interim dividend as better-than-expected second-quarter profit soars on reserve releases
- Hong Kong’s biggest currency-issuing bank said it would pay out an interim dividend of 7 US cents a share
- Pre-tax profit was US$5.06 billion, beating a consensus estimate of US$3.67 billion
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HSBC , the biggest of the city’s three currency-issuing banks, said it would restore its interim dividend to shareholders as it reported better-than-expected second-quarter profit on releases of reserves for soured loans and lower operating expenses.
The Prudential Regulation Authority, an arm of the Bank of England, removed “temporary guardrails” last month that limited the amount HSBC and other United Kingdom-based lenders could distribute to shareholders after they resumed paying dividends for the 2020 financial year. HSBC is based in London, but generates most of its profit in Asia.
The bank, one of Europe’s biggest by assets, said it would pay an interim dividend of 7 US cents a share, but would not consider reinstating quarterly dividends before 2022. Analysts expect the bank to pay a dividend of 23 US cents a share for full-year 2021, according to market consensus.
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“These are good results that reflect the return of growth in our main markets and marked progress in the execution of our strategy,” Noel Quinn, the bank’s CEO, 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. ”
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In the second quarter, the lender’s pre-tax profit was US$5.06 billion, beating a consensus estimate of US$3.67 billion by analysts compiled by the bank, and a significant improvement over the US$1.09 billion it reported a year earlier. On a net basis, HSBC earned a profit of US$3.4 billion in the second quarter, compared with a profit of US$192 million a year ago.
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