22nd Apr 2016 11:16
LONDON (Alliance News) - HSBC Holdings PLC, the second largest dividend payer in the FTSE in 2015, is "ever more conscious" of the importance of the payment to shareholders, Chairman Douglas Flint said Friday, particularly in the wake of the drop in its share price over the course of the last year.
Speaking at HSBC's annual meeting of shareholders, Flint said the share price is a matter of "huge importance" to all at the gathering. Since the corresponding gathering a year earlier, the bank's share price has fallen by about 23%, or 17% taking into account dividends received by shareholders in that time, he said.
"Clearly we are not content with this. We are all acutely aware of the importance of the share price - it affects all of us, including the executive directors who are largely paid in shares," Flint told shareholders.
Chief Executive Stuart Gulliver struck a similar tone. "The share price isn't where we want it to be," he said, citing weak global growth and China's economic slowdown, zero or negative rates implemented in markets such as Europe, and an uncertain outlook for the global economy.
Speaking in response to a question asked by a shareholder, Flint said HSBC is "poised to be one of the winners" in the event of interest rate increases in its markets, for example in the US and the UK. Low interest rates have hit the profitability of taking deposits, he said.
Having seen its pretax profit rise by 1.0% to USD18.87 billion in 2015, HSBC increased its total dividend for that year to USD0.51 per share from USD0.50 per share. Future increases in the dividend depend on profitability, Gulliver said.
"Our ability to pay an industry-leading dividend continues to set HSBC apart," Gulliver said. "We remain committed to a progressive dividend, subject to the overall long-term profitability of the group and the further release of less efficiently deployed capital."
Flint also warned shareholders that the bank and its customers would probably suffer in the event the UK votes to leave the European Union.
Flint said the bank's own economic research has been "very clear" about the advantages of EU membership for the UK.
"From our own narrow perspective, a decision to leave could require a restructuring of some of HSBC's wholesale operations based in the UK. This would clearly depend upon the terms on which the UK would have access prospectively to European markets should the UK vote to leave. We have a major bank in France so have the option to move some staff currently in London to Paris if required," Flint told the meeting.
He said the "more important and unquantifiable risk" of the June 23 referendum concerns the bank's customers
"We believe that the UK would enter a period of great economic uncertainty in the event of a vote to leave and should the UK economy slow and economic conditions deteriorate as our research suggests, in at least the short to medium term, this would affect many of our customers in the UK and the economic environment we operate in. This is likely to have a negative impact on HSBC," Flint said.
How to vote is a matter for the British people, Flint said: "HSBC is not affiliated to either campaign. Nor will we be making a donation to either side. It is not appropriate for us to be drawn into a political debate that goes far beyond economics."
Shares in HSBC were down 0.8% at 468.00p on Friday midday in London.
By Samuel Agini; [email protected]; @samuelagini
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