HSBC beats estimates with $8.8 billion in pre-tax profit for 2020; resumes dividend payment

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HSBC building in the Canary Wharf district of London, U.K.

Leon Neal | AFP | Getty Images

HSBC is due to report financial results for 2020 on Tuesday, during which the bank is expected to update investors on its business restructuring plans and whether it would resume dividend payments.

Like many of its peers globally, HSBC last year built up provisions for potential loan losses as a result of the coronavirus pandemic.

The London-headquartered bank’s reported profit before tax for the whole of 2020 is forecast to fall 37.6% year-on-year to $8.3 billion, according to analyst estimates compiled by the bank.

Ahead of the earnings release, HSBC shares in Hong Kong jumped 2% in early Tuesday trade.

Beyond the financial results, investors will be watching out for the bank’s comments on dividend payments and share buybacks. HSBC halted both those activities last year as British regulators urged lenders to conserve capital.

The bank had said in its third-quarter earnings release that it would consider paying a “conservative dividend” if circumstances allow. It said a decision would be made and communicated when it released full-year 2020 financial results.

The Bank of England in December said British banks can resume paying some dividends. And Barclays last week announced it would resume such payouts and embark on a 700 million pounds ($985.4 million) share buyback.

Jackson Wong, asset management director at Amber Hill Capital, told CNBC’s “Street Signs Asia” on Tuesday that a dividend per share of between 13 cents and 15 cents from HSBC would be considered “reasonable” by investors.

His forecast is in line with analyst estimates compiled by HSBC, that pointed to a dividend per share of 13 cents for 2020.

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