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23rd February 2021
HSBC Group Chief Executive Quinn reports on 2020 financials
Noel Quinn, HSBC Group Chief Executive, comments “In 2020, our people delivered an exceptional level of support for our customers in very tough circumstances, while our strong balance sheet and liquidity gave reassurance to those who rely on us. We achieved this while delivering a solid financial performance in the context of the pandemic– particularly in Asia–and laying firm foundations for our future growth. I am proud of everything our people achieved and grateful for the loyalty of our customers during a very turbulent year.
The growth plans we are announcing aim to establish HSBC as a dynamic, efficient and agile global bank with a digital-first mindset, capable of providing a world-leading service to our customers and strong returns for our investors. We intend to deliver them at pace.”
2020 financial performance(vs 2019) highlights are:
Reported profit after tax down 30% to $6.1bn and reported profit before tax down 34% to $8.8bn from higher expected credit losses and other credit impairment charges ‘ECL’) and lower revenue, partly offset by a fall in operating expenses. Reported results in 2020 included a $1.3bn impairment of software intangibles, while reported results in 2019 included a $7.3bn impairment of goodwill. Adjusted profit before tax down 45% to $12.1bn.
Reported revenue down 10% to $50.4bn, primarily due to the progressive impact of lower interest rates across HSBC global businesses, in part offset by higher revenue in Global Markets. Adjusted revenue down 8% to $50.4bn.
Net interest margin (‘NIM’) of 1.32% in 2020, down 26 basis points (‘bps’) from 2019, due to the impact of lower global interest rates.
Reported ECL up $6.1bn to $8.8bn, mainly due to the impact of the COVID-19 outbreak and the forward economic outlook. Allowance for ECL on loans and advances to customers up from $8.7bn at 31st December 2019 to $14.5bn at 31st December 2020.
Reported operating expenses down 19% to $34.4bn, mainly due to the non-recurrence of a $7.3bn impairment of goodwill. Adjusted operating expenses down 3% to $31.5bn, as cost-saving initiatives and lower performance-related pay and discretionary expenditure more than offset the growth in investment spend.
During 2020, deposits grew by $204bn on a reported basis and $173bn on a constant currency basis, with growth in all global businesses.
Common equity tier 1 (‘CET1’) ratio of 15.9%, up 1.2 percentage points from 14.7% at 31 December 2019, which included the impact of the cancellation of the fourth interim dividend of 2019 and changes to the capital treatment of software assets.
After considering the requirements set out in the UK Prudential Regulation Authority’s(PRA) temporary approach to shareholder distributions for 2020, the Board has announced an interim dividend for 2020 of $0.15 per ordinary share, to be paid in cash with no scrip alternative.
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