Dividend stays put but HSBC profits drop

Added 3rd May 2016

HSBC’s executive management was at pains to put to rest concerns the bank might look to cut its dividend.

Dividend stays put but HSBC profits drop

Dismissing analyst questions on the subject during the conference call following the firm’s first quarter results, HSBC group finance director Ian Mackay said: “The guidance on dividends has not changed and it is not going to change unless there is a culmination of factors that lead to a wider recessionary environment in the markets in which we operate, or we get a significantly higher set of capital requirements.”

And, while he added that such a thing was never off the table, two bad months at the beginning of a year were not the right basis on which to make such decisions.

Reiterating the point, CEO Stuart Gulliver added: “Two bad months followed by two ok months are not a trend.”

The firm kept its dividend flat at $0.1 for the quarter.

Indeed,  he said: While the extreme levels of volatility experienced in the first two months of the year had significantly impacted the firm’s markets and wealth management businesses, that had stabilised in March and April looked to have followed a similar trend.

In the firm’s earnings release it expanded, that while those two businesses were hit: “Commercial Banking continued its momentum in spite of the slow-down in global trade, and we increased market share across our strategic trade corridors. We also grew revenue elsewhere in Retail Banking and Wealth Management, particularly from current and savings accounts in Hong Kong and the UK, and personal lending in Asia and Mexico.”

For the three months the firm recorded a pre-tax reported profit of $6.1bn, down 14% on the comparable period of 2015. If significant items and currency translations are excluded, pre-tax profits were down, 18% or $1.2bn to $5.4bn.

Excluding the effects of significant items and currency translation, profit before tax was down by $1.2bn or 18% from 1Q15, the firm said.

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Geoff Candy

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Geoff Candy joined Portfolio Adviser as News Editor in May 2014. He has been a financial journalist and broadcaster since 2005 and, in that time has worked in both South Africa and the Netherlands, covering everything from high street retailers and construction companies to mining and insurance.

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