The banking sector has been through the wars over the past decade or so, with the global financial crisis and PPI scandal knocking it for six. The coronavirus pandemic looked set to inflict more damage, prompting banks to put aside large amounts of money to cover any bad debts. So far it looks as if they were over-cautious.
HSBC is not only releasing some of these provisions, but it is also toasting good trading in various parts of its business. In the UK it is riding the surge in demand for properties, with its mortgage lending doing well in the first quarter.
“These factors will put pressure on the business to be generous with dividends, yet HSBC remains cautious while the pandemic rages on and won’t decide on when next to pay cash to shareholders until August,” said AJ Bell’s Russ Mould.
“Investors will be pleased that share prices across the banking sector in general have picked up in the past six months following a miserable period, but ultimately dividends are one of the key reasons why people own shares in the likes of HSBC and any reluctance by these banks to dole out the cash will not go down well.”
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