HSBC, the largest European bank by assets, posted a net attributable profit of $ 3,898 million (€ 3,202 million) in 2020, representing a 34.7% drop compared to the entity’s result in the previous year , as a consequence of the impact of the Covid-19 pandemic, which has led the financial firm to increase the amount destined to cover credit risk by 220%.
In the last year, the British entity, but whose business is mainly concentrated in Asia, allocated 8,817 million dollars (7,243 million euros) to cover potential credit losses and other defaults, a figure that represents more than three times the amount of 2,756 million dollars (2,264 million euros) dedicated to this item in 2019.
HSBC’s operating turnover reached 63,074 million dollars (51,813 million euros) in 2020, 10% below the entity’s income a year earlier, including a 9.5% decline in interest income net, up to 27,578 million dollars (22,654 million euros) and 1.2% of commission income, up to 11,874 million dollars (9,754 million euros).
At the end of the year, HSBC placed its CET1 top-quality capital ratio at 15.9%, compared to 14.7% at the end of 2019.
“We obtained a solid financial performance in the context of the pandemic, particularly in Asia, and we are laying firm foundations for our future growth,” said Noel Quinn, CEO of the entity, who announced that HSBC has had “a good start to 2021” , for which he acknowledged being “cautiously optimistic.”
On the other hand, the president of the British bank, Mark E Tucker, announced that the entity will resume the distribution of dividends with the payment of a provisional dividend of 0.15 dollars charged to the year 2020.
Likewise, the entity indicated that, although it will take into consideration the possibility of making share buybacks, it does not consider it in the short term, since it does not consider that there are immediate opportunities.
On the other hand, HSBC indicated its intention to increase its focus on its strongest areas, increasing and accelerating its investments, as well as continuing to advance in the transformation of its underperforming businesses.
In this sense, the bank maintains its goal of reducing its adjusted cost base to a maximum of 31,000 million dollars (25,460 million euros) by 2022, as well as a reduction of the gross risk-weighted assets (‘RWA’) of more than 100,000 million dollars (82,149 million euros) by 2022.
However, the entity has abandoned its return on average tangible capital (‘RoTE’) target of between 10% and 12% in 2022, as originally planned, and is now setting a goal of reaching a higher or equal RoTE at 10% in the medium term.