HSBC sees 34% drop in profits from Covid impact

HSBC sees 34% drop in profits from Covid impact

HSBC has reported a 34% drop in profits as its global business deals with the impact of the Covid-19 pandemic.

While annual profits slumped by slightly more than one third, they are better than analysts expected.

The bank reported profit before tax of $8.78bn (£6.24bn) for 2020, down from $13.35bn a year earlier.

At Tuesday’s announcement, UK-based HSBC said it would pay a dividend of $0.15 a share in cash, the first payout announced since October 2019.

Europe’s biggest bank is expected to give an update on its strategy later on Tuesday, which many analysts predict will see it accelerate its “pivot to Asia”.

While headquartered in the UK, the bulk of HSBC’s profits come from Asia.

Reports have also suggested the Hong Kong-founded bank will also give more details on plans to scale back its US retail banking operations.

HSBC has a 150-branch network in the US and it would mark the end of the bank’s 40-year association there. 

The bank has previously announced widespread cost-cutting measures, with up to 35,000 jobs to be cut globally.

HSBC chairman Mark Tucker told the Asian Financial Forum conference in January that there were “real opportunities to grow our wealth business and expand across South Asia”.

But the bank has come under fire for its endorsement of a controversial national security law that China has imposed on Hong Kong.

HSBC has also been severely criticised by British MPs and US politicians for closing the accounts of pro-democracy activists.Carrie Lam, Hong Kong’s chief executive, has praised the bank in recent weeks, saying she would “love” for HSBC to expand in the city. Founded in 1865 as the Hongkong and Shanghai Banking Corp., HSBC moved its base to London in 1993 after buying Midland Bank in the run-up to the colony’s 1997 return to China.

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