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23 Feb 2021 | 07:02

HSBC turns to Asia, resumes dividend as profits slump 34%

(Sharecast News) - HSBC reported a 34% slump in annual profits dur to the Covid-19 pandemic, but resumed dividend payments and said it would refocus operations on China. Europe's biggest bank on Tuesday said pre-tax profit fell to $8.8bn from $13.3bn in the year to December 31, while adjusted profit before tax plunged 76% to $12.1bn as expected loan losses rose $6.1bn to $8.8bn.

Allowances for expected credit losses on loans and advances to customers increased to $14.5bn from $8.7bn year on year.

The bank, which declared a dividend of 15 cents a share, said it would pivot towards wealth management in Asia, its most profitable centre, as it mitigated exposure to record low interest rates across European retail and business banking.

Reported revenue fell 10% to $50.4bn, primarily due to the progressive impact of lower interest rates across the bank's global businesses, in part offset by higher revenue in global markets. Adjusted revenue was down 8% to $50.4bn.

Net interest margin, the difference between loan and savings rates, was 1.32% in 2020, down 26 basis points from 2019, due to the impact of lower global interest rates, HSBC added.

Chief executive Noel Quinn said the bank planned to focus on "the areas in which we are strongest".

"In wealth and personal banking, we aim to become a market-leader for high net worth and ultra high net worth clients in Asia and the Asian diaspora, and to invest in our biggest retail markets where the opportunity is greatest."

"In commercial banking, we want to remain a global leader in cross-border trade, and to lead the world in serving mid-market corporates internationally. In global banking and markets, we intend to invest to capture trade and capital flows into and across Asia, while connecting global clients to Asia and the Middle East through our international network."
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