HSBC resets dividends target, uncorks revised strategy focused on wealth management in Asia
HSBC Holding PLC reported on Tuesday it scrapped its long-term probability target and introduced a revised strategy focusing on wealth management in Asia, following a whopping 34% decline in the bank’s annual profits due to the pandemic crisis.
HSBC’s long-term probability target of having 10 to 12% returns on tangible equity is replaced with a new goal of 10% over the medium term. Europe’s largest bank introduced its reset dividend goal as a low-interest-rate environment and tough market conditions lingered, dimming the prospects for the wealth management business.
Looking for new growth drivers, HSBC executives also introduced a revised strategy that mainly focuses on wealth management in Asia after it accounted for 146% of its 2020 profit.
HSBC also unveiled the first payout since October 2019, vowing to pay a dividend of $0.15 a share in cash. Last year, the Bank of England barred all big lenders from paying dividends or buying back shares to conserve capital.
Moreover, the bank also said it would cease the practice of paying a quarterly dividend and target a payout ratio of between 40% and 55% of reported earnings per ordinary share from 2022 onwards.