HSBC announce 2010 interim profits of US$68 B , which is almost double that of last year. Markets respond very positively. HSBC management maintain the same quarterly dividend of US 8 cents, which I think is a very realistic dividend strategy. I also think that they will make a slight increase in the final dividend when results are more stable.
Before the annoucement, most investment banks forecasted HSBC profits from about $50B to over $100B, which made up a very big range. A major portion of this interim profits comes from reduction of reserves for doubtful accounts and fair value adjustments. Devils are in the details. We have to find out in coming days details of their profits before we can judge whether they have improved their profitability, and operating efficiency. One thing can be fairly certain though.... the business environment has much improved, and the danger of downward trend has turnarounded, despite the Euro zone debt situations.
I think HSBC shareholders can be quite assured with full year dividend of aro 4.5 to 5%, with a bit optimism on their second half of FY 2010. However, I would not bet for significant increase in HSBC prices.
Things are getting better and better !
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