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HSBC 2021 INTERIM RESULTS – HIGHLIGHTS

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idpickering
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HSBC 2021 INTERIM RESULTS – HIGHLIGHTS

#431939

Postby idpickering » August 2nd, 2021, 6:08 am

Financial performance (1H21 vs 1H20)
• Reported profit after tax increased by $5.3bn to $8.4bn and reported profit before tax increased by $6.5bn to $10.8bn.
A fall in revenue reflected 2020 interest rate reductions and lower Markets and Securities Services (‘MSS’) revenue relative to a strong
1H20. This was more than offset by releases in our expected credit losses and other credit impairment charges (‘ECL’). Reported profit
in 1H20 included an impairment of software intangibles of $1.2bn, mainly in Europe.
• All regions profitable in 1H21, notably HSBC UK Bank plc reported profit before tax of over $2.1bn in the period. Despite
interest rate headwinds, there was continued strength in Asia and a material recovery in profitability in all other regions, reflecting a
net release in ECL as the economic outlook improved.
• Reported revenue down 4% to $25.6bn, primarily reflecting 2020 interest rate reductions and lower MSS revenue in Global
Banking and Markets (‘GBM’). These reductions were partly offset by net favourable movements in market impacts in life insurance
manufacturing and valuation adjustments in GBM.
• In 1H21, lending increased by $21.5bn on a reported basis, reflecting growth in Wealth and Personal Banking (‘WPB’) and
Commercial Banking (‘CMB’). Deposits grew by $26.3bn on a reported basis, with increases in all global businesses.
• Net interest margin (‘NIM’) of 1.21% in 1H21, down 22 basis points (‘bps’) from 1H20. NIM in 2Q21 of 1.20% remained
stable compared with 1Q21.
• Reported ECL were a net release of $0.7bn, compared with a $6.9bn charge in 1H20. The net release in 1H21 primarily
reflected an improvement in the economic outlook since 2020. The reduction also reflected low levels of stage 3 charges in 1H21, as
well as the non-recurrence of a large charge in 1H20 related to a corporate exposure in Singapore.
• Reported and adjusted operating expenses increased 3%, primarily due to a higher performance-related pay accrual as
profitability improved, as well as continued investment, partly offset by the impact of our cost-saving initiatives.
• Return on average tangible equity (‘RoTE‘) (annualised) of 9.4%, up 5.6 percentage points compared with 1H20.
• Common equity tier 1 (‘CET1’) ratio of 15.6%, down 0.3 percentage points from 31 December 2020, reflecting an increase
in RWAs from lending growth and a decrease in CET1 capital including the impact of foreseeable dividends.
• The Board has announced an interim dividend for 1H21 of $0.07 per ordinary share, to be paid in cash

And later;

Interim dividend for the 2021 half-year

On 2 August 2021, the Directors approved an interim dividend for the 2021 half-year of $0.07 per ordinary share in respect of the
financial year ending 31 December 2021. The dividend will be payable on 30 September 2021 to holders on the Principal Register in the
UK, the Hong Kong Overseas Branch Register or the Bermuda Overseas Branch Register on 20 August 2021.


Available via here;

https://www.hsbc.com/investors/results- ... ouncements

funduffer
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Re: HSBC 2021 INTERIM RESULTS – HIGHLIGHTS

#431948

Postby funduffer » August 2nd, 2021, 8:05 am

Thanks for posting, Ian.

So that's $0.07 per share for the interim dividend. Let's call it 5p. Add that to the 10.79p we got back in April, then this (15.79p) is probably the re-based level of dividend we can expect from HSBC in the next few years.

With a current share price of 397.5p, that's a yield of a tad under 4%.

So, still a HYP share (FTSE 100 yield at 3.29%), and worth hanging on to, I think.

Will be interesting to see how 'progressive' it is in the coming years. I can't see any commentary on this in the INS, but I have not read it all!

FD

idpickering
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Re: HSBC 2021 INTERIM RESULTS – HIGHLIGHTS

#431949

Postby idpickering » August 2nd, 2021, 8:17 am

funduffer wrote:Thanks for posting, Ian.

So that's $0.07 per share for the interim dividend. Let's call it 5p. Add that to the 10.79p we got back in April, then this (15.79p) is probably the re-based level of dividend we can expect from HSBC in the next few years.

With a current share price of 397.5p, that's a yield of a tad under 4%.

So, still a HYP share (FTSE 100 yield at 3.29%), and worth hanging on to, I think.

Will be interesting to see how 'progressive' it is in the coming years. I can't see any commentary on this in the INS, but I have not read it all!

FD


You’re welcome. Being a tad under 4% yield doen’t tempt me to buy back into the share tbh. I can see why other holders might be inclined to stick with them though.

Ian.

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Re: HSBC 2021 INTERIM RESULTS – HIGHLIGHTS

#431956

Postby moorfield » August 2nd, 2021, 8:55 am

funduffer wrote:
So that's $0.07 per share for the interim dividend. Let's call it 5p. Add that to the 10.79p we got back in April, then this (15.79p) is probably the re-based level of dividend we can expect from HSBC in the next few years.



I'm not sure we can assume that - yet. That 10.79p (15c) was paid for the last financial year, which was a mess anyway. This 7c is for first half of current financial year. What will the second half be - 7c again, 8c (making up another 15c), or more? I scanned the doc and couldn't find any projection for the full year. I think I will hold with a forecast of 15c again for this year, until told otherwise later on. Note the timetable now seems to have changed from a quarterly to semi annual payout. There is sleight of hand at work and it looks suspiciously like another cut to me.

Disappointed with HSBC. It has become a "brown dwarf" in my portfolio (lost both capital and dividend since original purchase) , perhaps I should be thinking about dumping it and moving on.

floyd3592
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Re: HSBC 2021 INTERIM RESULTS – HIGHLIGHTS

#431957

Postby floyd3592 » August 2nd, 2021, 8:58 am

moorfield wrote:
funduffer wrote:Disappointed with HSBC. It has become a "brown dwarf" in my portfolio (lost both capital and dividend since original purchase) , perhaps I should be thinking about dumping it and moving on.


Same for me. What to replace my holding in them with tho?..

idpickering
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Re: HSBC 2021 INTERIM RESULTS – HIGHLIGHTS

#431964

Postby idpickering » August 2nd, 2021, 9:14 am

floyd3592 wrote:
moorfield wrote:
funduffer wrote:Disappointed with HSBC. It has become a "brown dwarf" in my portfolio (lost both capital and dividend since original purchase) , perhaps I should be thinking about dumping it and moving on.


Same for me. What to replace my holding in them with tho?..


You don’t ‘have’ to hold a bank. Do you have Legai & General, or Phoenix Group? Having said that, let’s not let the thread wander off topic though.

Ian.

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Re: HSBC 2021 INTERIM RESULTS – HIGHLIGHTS

#431965

Postby onthemove » August 2nd, 2021, 9:19 am

moorfield wrote: I scanned the doc and couldn't find any projection for the full year. I think I will hold with a forecast of 15c again for this year, until told otherwise later on. Note the timetable now seems to have changed from a quarterly to semi annual payout. There is sleight of hand at work and it looks suspiciously like another cut to me.


They do say this though...

" we now expect to move to within our target
dividend payout ratio range of 40% to
55% of reported earnings per ordinary
share in 2021"


Though obviously we don't know what full year earnings will look like, but full year earnings estimates perhaps give a reasonable hint / ballpark figure (I don't have any estimates to hand and currently at work so don't have time to look further at this time).

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Re: HSBC 2021 INTERIM RESULTS – HIGHLIGHTS

#431968

Postby monabri » August 2nd, 2021, 9:46 am

Here's some data on HSBC...based on previous data, any estimation of a dividend based on EPS is guesswork at best.

https://financials.morningstar.com/rati ... =xlon:hsba

However, behind the scenes, China's role in business investment is the issue.

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Re: HSBC 2021 INTERIM RESULTS – HIGHLIGHTS

#431969

Postby moorfield » August 2nd, 2021, 9:57 am

idpickering wrote:
You don’t ‘have’ to hold a bank. Do you have Legai & General, or Phoenix Group? Having said that, let’s not let the thread wander off topic though.




Well I'm not permitted to mention what I might buy, but I think I can mention the opposite and that I sold some banking preference shares SAN to buy HSBA a few years ago, only to watch it promptly slash its dividend. Looking back, I must have taken leave of my senses - I was trying to be more "HYP" I suppose but forgetting that I do like the odd high yield share which doesn't cut its dividend. Sigh. :roll: Not a mistake I'm going to be repeating!

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Re: HSBC 2021 INTERIM RESULTS – HIGHLIGHTS

#431970

Postby Dod101 » August 2nd, 2021, 10:03 am

Unfortunately they are another of those companies which was clearly paying out in dividends more than they could afford and they have now taken the opportunity to in effect cut the dividend and there does not seem much scope for any really exciting growth in the near future. With all the reserving last year and now a release of a lot of those reserves it is very difficult to see where they are.

I think I might cut back my holdings a bit but not at current levels. The shares are just back up above £4 or were the last time I looked.

Dod

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Re: HSBC 2021 INTERIM RESULTS – HIGHLIGHTS

#431971

Postby idpickering » August 2nd, 2021, 10:07 am

moorfield wrote:
idpickering wrote:
You don’t ‘have’ to hold a bank. Do you have Legai & General, or Phoenix Group? Having said that, let’s not let the thread wander off topic though.




Well I'm not permitted to mention what I might buy, but I think I can mention the opposite and that I sold some banking preference shares SAN to buy HSBA a few years ago, only to watch it promptly slash its dividend. Looking back, I must have taken leave of my senses - I was trying to be more "HYP" I suppose but forgetting that I do like the odd high yield share which doesn't cut its dividend. Sigh. :roll: Not a mistake I'm going to be repeating!



I hear you. Sadly, none of us can tell the future of any share imho. The best we can do, is our best guess at the time of purchase, I guess...

Ian.

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Re: HSBC 2021 INTERIM RESULTS – HIGHLIGHTS

#431973

Postby moorfield » August 2nd, 2021, 10:15 am

idpickering wrote:
I hear you. Sadly, none of us can tell the future of any share imho.




... except, perhaps, for the high yield share I'm not permitted to mention that I might buy!

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Re: HSBC 2021 INTERIM RESULTS – HIGHLIGHTS

#431979

Postby Dod101 » August 2nd, 2021, 10:28 am

moorfield wrote:
idpickering wrote:
I hear you. Sadly, none of us can tell the future of any share imho.




... except, perhaps, for the high yield share I'm not permitted to mention that I might buy!


Go on tell us! I am looking for inspiration as well. I do not mind holding at a yield of a tad under 4% but I need a real prospect of growth in the share price for that and I do not see it happening at the moment. In fact the share price could easily sink to £3.50 ish at which level it would yield just a bit more than 4%.

Dod

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Re: HSBC 2021 INTERIM RESULTS – HIGHLIGHTS

#431986

Postby Dod101 » August 2nd, 2021, 10:39 am

Just as an aside, if the Directors approved the dividend on 2 August, they must have had an early start, considering that they released these results at
5 am

Dod

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Re: HSBC 2021 INTERIM RESULTS – HIGHLIGHTS

#431999

Postby MDW1954 » August 2nd, 2021, 11:32 am

Dod101 wrote:
moorfield wrote:
... except, perhaps, for the high yield share I'm not permitted to mention that I might buy!


Go on tell us! I am looking for inspiration as well. I do not mind holding at a yield of a tad under 4% but I need a real prospect of growth in the share price for that and I do not see it happening at the moment. In fact the share price could easily sink to £3.50 ish at which level it would yield just a bit more than 4%.

Dod


Dod,

He has told us! Scroll up, and you'll see it.

MDW1954

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Re: HSBC 2021 INTERIM RESULTS – HIGHLIGHTS

#432017

Postby Dod101 » August 2nd, 2021, 12:54 pm

The market seems unimpressed with these results but it is not all bad. A Return on Equity of 9.4% is good and a CET of 15.6% shows as always a well capitalised bank. I think the real problem is that the dividend is lower than many of us had hoped/expected, but at least it is surely now at what might well be a sustainable level. I will probably just keep my shares and see how things settle down because as I think I said earlier they had big write downs last year at this time and have now written back some of these. It makes it a little difficult to see what is really going on.

Dod

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Re: HSBC 2021 INTERIM RESULTS – HIGHLIGHTS

#432034

Postby onthemove » August 2nd, 2021, 2:27 pm

Dod101 wrote:... but at least it is surely now at what might well be a sustainable level...


Isn't the problem here that no company would intentionally raise a 'progressive' dividend to a level they didn't believe sustainable at the time of the raise.

My point being, this is now seen as a 'sustainable' level because the business has deteriorated and this new, lower dividend is now required in order to be sustainable.

The problem is, that to be sustainable from this level, it now requires the deterioration that resulted in the drop to here, needs to have been halted.

I don't make any comment specifically in respect of HSBC here, but anecdotally (without checking all of my records), the feeling I have is that rather too many companies I've held that have cut their dividend once, have gone on to do so again - i.e. the deterioration has continued. I lean towards the view that this tends to be a function of management - the gradual decline becomes normalised.

I guess this is perhaps in part why the HYP approach tries to look for companies with a history of rising dividends.

(For most big companies, I'm not sure that covid can be blamed for needing a rebased ongoing dividend, as opposed to 12 to 18 month break, then a resumption from where they were before)

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Re: HSBC 2021 INTERIM RESULTS – HIGHLIGHTS

#432037

Postby Dod101 » August 2nd, 2021, 2:43 pm

onthemove wrote:
Dod101 wrote:... but at least it is surely now at what might well be a sustainable level...


Isn't the problem here that no company would intentionally raise a 'progressive' dividend to a level they didn't believe sustainable at the time of the raise.

My point being, this is now seen as a 'sustainable' level because the business has deteriorated and this new, lower dividend is now required in order to be sustainable.

The problem is, that to be sustainable from this level, it now requires the deterioration that resulted in the drop to here, needs to have been halted.

I don't make any comment specifically in respect of HSBC here, but anecdotally (without checking all of my records), the feeling I have is that rather too many companies I've held that have cut their dividend once, have gone on to do so again - i.e. the deterioration has continued. I lean towards the view that this tends to be a function of management - the gradual decline becomes normalised.

I guess this is perhaps in part why the HYP approach tries to look for companies with a history of rising dividends.

(For most big companies, I'm not sure that covid can be blamed for needing a rebased ongoing dividend, as opposed to 12 to 18 month break, then a resumption from where they were before)


Well no big well established company wants to cut its dividend. Look at Shell, Glaxo and HSBC for three. They have all for some time been paying dividends which have not been covered by earnings and have been very reluctant to cut them. The reconstruction of the business has given Glaxo the opportunity to rebase its dividend, the banning of dividends by the PRA gave HSBC the opportunity and of course Shell was forced by sheer lack of earnings and cashflow. I have not noticed the tendency you mention with my shares but in any case, I think that HSBC should be able to modestly increase its dividend in the future, but who knows? I certainly do not.

Dod

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Re: HSBC 2021 INTERIM RESULTS – HIGHLIGHTS

#433054

Postby Dod101 » August 7th, 2021, 7:54 am

The market seems to have decided that the HSBC results were not so bad after all. The share closed the week ending last evening at just short of £4.10, higher I think than the day the interim results were announced.

Dod


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