HSBC is the biggest UK-listed bank (Katie Collins/PA)
(Picture: PA Archive)HSBC has announced plans to resume paying quarterly dividends and has beefed up one of its main profit targets as the biggest UK-listed bank seeks to satisfy investors who have been hearing calls for the group to be broken up.
Headquartered in London, much of HSBC’s profits come from Asia and one of its major investors -- Ping An Insurance -- has called for the separation of the Asian business. HSBC announced second-quarter profit before tax of $5 billion (£4.1 billion) on Monday, just shy of the $5.1 billion in the same period a year ago.
The outlook for rising interest rates at global central banks helped it issue an upbeat forecast for net interest income of “at least $31 billion for 2022 and at least $37 billion for 2023”.
“We expect a dividend payout ratio of around 50% for 2023 and 2024,” it said as it pledged to re-establish quarterly payouts, which were seen as one of them main attractions in the investment case for the bank before the disruption of the pandemic, providing shareholders with a steady income stream.
Noel Quinn, group CEO of HSBC, said: “We understand and appreciate the importance of dividends to all of our shareholders. We will aim to restore the dividend to pre-Covid-19 levels as soon as possible.”
Shares in the company rose 6.1% to 545p and second place on the FTSE 100 leaderboard.
HSBC set an interim dividend of $0.90 per share.
“We also intend to revert to paying quarterly dividends in 2023, although we expect the quarterly dividend for the first three quarters to initially be reinstated at a lower level than the historical quarterly dividend of $0.10 per share paid up to the end of 2019,” said the company.
Quinn also lifted targets for key performance measure, sending a clear signal to activist investors: “We are confident of achieving a return on tangible equity of at least 12% from 2023 onwards, which would represent our best returns in a decade.”
