HSBC dished out $19bn to shareholders last year – and there’s more to come in 2024

HSBC dished out roughly $19bn (£15.1bn) to shareholders last year and expects hefty payouts to continue in 2024, its management has said, as Europe’s biggest bank looks to weather economic uncertainty and interest rate cuts.

At the Asia-focused lender’s annual general meeting on Friday, chair Mark Tucker said the bank’s decision to return the cash to investors via dividends and share buybacks reflected the strength of the board’s strategy.

HSBC has planned for a further $8.8bn (£7bn) in rewards already this year and is targeting a dividend payout ratio of 50 per cent in 2024, he added.

The massive rewards dwarf those from other UK-based banks and came after HSBC enjoyed a record annual profit last year on the back of global interest rate hikes. Its pretax profit soared 78 per cent to $30.3bn (£24.0bn) in 2023.

However, with inflation easing worldwide, central banks are expected to start cutting rates in the coming months, which could threaten major lenders’ bottom lines.

HSBC economists have projected that global inflation will gradually fall to 5.8 per cent this year and 3.8 per cent in 2025. The bank’s analysts believe the European Central Bank and Bank of England will begin lowering rates in June, both cutting by 150 basis points by the end of 2025.

They expect the US Federal Reserve to make its first cut in September, lowering rates by 100 basis points by the end of next year.

However, Tucker warned that “it may not be a steady glide path” for rate cuts, noting “growth and employment numbers holding up and inflationary pressures lingering”.

In recent years, HSBC has had to deal with the Covid-19 pandemic, an economic slowdown in its key Chinese market and a challenge from its largest shareholder, Ping An, to carve out the bank’s Asia business.

No other major investor backed Ping An’s plan at the bank’s AGM last year.

“I am pleased to say that the overwhelming majority of shareholders agreed with us,” Tucker told shareholders on Friday. “A year later, you can see the value of your support for the board’s recommendations.”

“Looking ahead, the dividend outlook remains strong,” he added. “We remain very focussed on, and committed to, rewarding you for the trust that you have placed in us.”

Tucker is now looking for his third chief executive after Noel Quinn earlier this week announced his surprise retirement after nearly five years in the role.