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As the global economy recovers, HSBC surpassed expectations in its first-half earnings for 2021 and made its second dividend payout since the Covid-19 pandemic. In the first half of this year, the bank’s pre-tax earnings more than doubled from a year ago, reaching $10.84 billion. Analysts’ expectations provided by the bank pointed to a reported pre-tax profit of $9.45 billion during that time period.
Meanwhile, revenue declined 4.5 percent year over year to $25.55 billion in the first half of 2021, roughly in line with analysts’ predictions of $25.52 billion. Following the release of earnings, HSBC shares in Hong Kong increased by more than 3%.
An improved economic outlook, according to HSBC Group Chief Executive Noel Quinn, has allowed the bank to begin releasing reserves set up for future loan losses. The “primary driver” of the bank’s increased profitability was this. “We were profitable in every region in the first half of the year,” Quinn said in a statement accompanying the earnings release. “This performance enables us to pay an interim dividend for the first six months of 2021,” he added. The bank declared an interim dividend of $0.07 per common share.
Because of an improved economic forecast, the bank released a net $719 million in reported probable credit loss. In the first half of 2021, the net interest margin, a measure of loan profitability, was 1.21 percent. This is a 22 basis point decrease from the same period the previous year.
For 2021, the bank expects a dividend distribution ratio of 40% to 55% of reported earnings per ordinary share.
Story By: Norvisi Mawunyegah