In a rising interest rate environment, one would expect banks to be reporting a boom in profits and doling out the dividends.
HSBC ticks the right boxes with an increase in cash payments to shareholders but full year reported pre-tax profit fell by 7% to $17.5 billion.
AJ Bell’s Russ Mould said: “As is typical with banking sector results, there are plenty of adjustments to factor in. Credits from deferred tax, impairments for a planned asset disposal, the list goes on. For your average investor, the results are as clear as mud.
“The one thing that’s easier to understand is shareholder returns. Investors can expect news on the return of share buybacks in May, and next year there will be a special dividend once the Canadian operations have been sold. There is also a 28% increase in the full year dividend for the year just reported and the frequency of payments will revert to once a quarter from Q1 this year.
“Most investors hold banking shares for their income, so on this measure HSBC is singing the right song.
“The small decline in its share price is most likely down to a bit of profit taking following a strong run in the lead-up to the results, rather than any implicit criticism of the numbers.”