H.SBC chief executive Noel Quinn has had an incredible first year in office. In 2020 alone, Quinn unveiled a major restructuring plan that will include at least 35,000 job cuts, combat Covid’s financial impact in both Asia and Europe, and lead the bank through a geopolitical storm over its response to the democratic upheaval in Hong Kong.
Now it is to be over the bank’s second straight year of annual profit decline.
HSBC is expected to show a 38% drop in pre-tax receipts from $ 13.3bn to $ 8.3bn when it reports its full-year results on Tuesday. This is the latest lender to be robbed by an increase in bad debt provisions, which is to protect against defaults that may be linked to the pandemic. These preparations are expected to bring the total to $ 9.1bn for 2020, according to consensus estimates, up from just $ 2.8bn a year earlier.
HSBC bankers are likely to see their bonus pool shrink again, after falling 3.8% to $ 3.3bn in 2019. Quinn and HSBC chief financial officer Ewen Stevenson have waived their cash bonus for 2020 and provide 25% of their salaries as a result of the Covid crisis. .
But shareholders are still ready to pay. HSBC appears to be the newest lender in the UK to resume share payments after the Bank of England lifted a temporary ban that forced it to scrap $ 4.2bn in payments to top shareholders. last spring. That ban was lifted – by limits – in December.
The chief executive will deliver an in-depth business update on Tuesday, a year on from announcing major job cuts and a new strategy. The background is gloomy. In October, Quinn warned that the days of normal free banking could be over, as he tries to find new income to compensate for low interest rates. HSBC could come under greater pressure if the Bank of England pushes interest rates below zero later this year.
In the meantime, the bank is likely to have more difficult questions with the London headquarters as to whether it is supporting the wrong horse in the battle over Hong Kong. He has opposed criticism in the west for backing China’s controversial security law, and for freezing the accounts of anti-democracy activists who critics say are a real target in the Bejing crack.
MPs on the UK foreign affairs committee were left uneasy last month, after Quinn again refused to comment on issues of “democracy or political systems” and said his main stimulus was Hong Kong’s economy. To help Kong and his citizens “through the current challenges”. He also refused to leave the Hong Kong market, saying it would not “harm” local customers.
HSBC makes the majority of its profits in Hong Kong and China.
In the UK, climate campaigners are targeting HSBC, backed by fifteen pension and investment funds, which want to force the bank to reduce its fossil fuels – starting with coal – alongside a Paris timeline that is in line with Paris’ climate goals.
They have cast a second climate vote at a major UK bank, following a similar resolution tabled at last year’s Barclays AGM.
While HSBC has pledged to reduce its carbon footprint to zero to zero by 2050, the current climate plan comes a short stop from a widespread ban on financing coal power, and does not allow consumers to turn away deals or cancel contracts depending on their fossil fuels. HSBC is Europe’s second-largest financier of fossil fuels after Barclays, according to the Rainforest Action Network (RAN).
The vote is not until May, so investors will have to wait to see if HSBC will support the resolution, or follow Barclays’ lead and submit another recommendation schedule.