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HSBC Holdings PLC ADR HSBC

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Morningstar’s Analysis

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5-Star Price

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Prudential Regulation Authority Allows HSBC and Standard Chartered to Resume Dividend Payouts

Michael Wu, CAIA Senior Equity Analyst

Analyst Note

| Michael Wu, CAIA |

While we expected the Prudential Regulation Authority, or PRA, to allow large United Kingdom banks to pay a dividend in fiscal 2020, the absolute dividend payment allowed was lower than anticipated. PRA is also carrying out a systemwide stress test in mid-2021 with results expected at the end of 2021. As such, no interim dividends in 2021 are expected and a final dividend likely at year-end. With consensus split on none, or a small dividend payment in 2020, we expect the PRA announcement to be slightly positive for HSBC Holdings' and Standard Chartered's share price. Both banks remain undervalued.

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Company Profile

Business Description

Established in 1865 in Hong Kong, London-based HSBC is one of the largest banks in the world with 40 million customers worldwide. It operates across 64 countries globally. Key regions include Asia, Europe, the Middle East and North Africa, and North America. The two largest markets for the bank are the United Kingdom and Hong Kong. The bank offers retail, commercial and institutional banking, global banking and markets, wealth management, and private banking.

Contact
8 Canada Square
London, E14 5HQ, United Kingdom
T +44 2079918888
Sector Financial Services
Industry Banks - Diversified
Most Recent Earnings Sep 30, 2020
Fiscal Year End Dec 31, 2020
Stock Type
Employees 230,317

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