HSBC has slashed banker bonuses and pledged to restore dividends to pre-pandemic levels, as the London-headquartered bank attempts to appease investors, including the top shareholder Ping An, which is pushing to split up the lender.
It came as the bank reported flat pre-tax profits of $5bn (£4.1bn) for the second quarter. Extra income from mortgages and loans was offset by the amount it had to put aside for potential defaults linked to weaker economic forecasts.
It resulted in a lower bonus pool for bankers, with $400m raised for performance-related payouts in the first half of the year compared with $900m a year earlier. Top bankers will have another six months to build the pool before bonuses are paid next spring.
Shareholders are also in line for an interim cash dividend of nine cents a share, although HSBC pledged to boost payouts for investors and said it would start paying dividends on a quarterly basis again from the start of 2023.
“We understand and appreciate the importance of dividends to all of our shareholders,” said Noel Quinn, the HSBC chief executive. “We will aim to restore the dividend to pre-Covid-19 levels as soon as possible. We also intend to revert to quarterly dividends in 2023.”
The move appears to be an attempt to appease investors after its largest shareholder – the Chinese insurer Ping An – revived calls to separate the bank’s profitable Asian business from the rest of the lender’s operations in April.
Investors including Ping An have been disappointed at the return on its investment, after HSBC cancelled the dividend during the first UK coronavirus lockdown and later reinstated it at only half the level paid out before the pandemic.
Ping An’s call for a breakup is the latest criticism aimed at HSBC, which has been pushed to consider its loyalties amid political tensions between the east and west after controversially accepting China’s authoritarian crackdown on democracy in Hong Kong in 2020.
Regarding pressures to break up the business, HSBC has previously referred to its global footprint, saying it “supports customers, corporates and institutions across key capital and trade hubs around the world. The most important thing for management to focus on is continuing to drive higher returns.”