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HSBC's pivot away from UK and US likely to overshadow financials on Tuesday

There will also be results from Holiday Inn owner Intercontinental Hotels, chemicals specialist Croda International and household goods manufacturer McBride

HSBC -

HSBC Holdings PLC (LON:HSBA) will take its turn to announce results for the final three months of 2020 on Tuesday, with the Asia-focused lender’s promised strategy update likely to be the main focus.

A year ago, chief executive Noel Quinn unveiled plans a year ago to cut 35,000 jobs around the world and then last autumn pledged to accelerate the transformation of the bank’s US business.

Plans to spin off the US business have now morphed into totally scrapping the North American arm instead, according to media reports.

HSBC is also stepping up its ‘pivot’ to Asia, with stories at the start of the week suggesting a raft of senior management are being shifted from London to Hong Kong, with further expansion planned in Singapore.

Section heads, including Greg Guyett, co-head of global banking and markets; Nuno Matos, chief executive of wealth and personal banking; and Barry O’Byrne, chief executive of global commercial banking; are among those said to be moving to Asia.

Plenty of investors will still be focused on the bank’s financials, including the dividend.

FTSE 100 peers Barclays and NatWest led the way with the sector’s expected resumption of shareholder payouts last week after the Bank of England’s Prudential Regulation Authority (PRA) lifted its ban but called for prudence.

The City is predicting the bank will make a full-year payment of US$0.13 per share for 2020, with the average forecast pointing to a reported pre-tax profit of US$8.3bn following almost US$9.1bn of expected credit losses and impairments. Net interest margin is forecast to be 1.34%.

Quinn’s US restructuring is expected to depress its profitability in the near term, JPMorgan said in a recent note, though the analysts expect economic growth to rebound faster in Asia and across emerging markets than the UK, the meaning there could be “upside potential from loan growth and lower impairments”.

Unemployment numbers 

UK employment data will be released on Tuesday, with the unemployment rate expected to climb.

“In theory that could be negative for [the pound], but the pound has been preternaturally strong recently as the market concentrates not on the economics but rather on the country’s surprisingly successful vaccine rollout,” said market analyst Marshall Gittler at BDSwiss. “I’d expect only a temporary dip unless it’s a disaster.”

Moreover, business surveys signal clearly that the rate of decline in employment has eased in recent months, following the extension of the furlough scheme until the end of April, noted economists at Pantheon Macroeconomics.

They only expect a modest rise in the headline unemployment rate to 5.1% in December from 5.0% in November.

Significant announcements on Tuesday February 23:

Finals: HSBC Holdings PLC (LON:HSBA), Intercontinental Hotels Group PLC (LON:IHG), Croda International PLC (LON:CRDA)

Interims: Clinigen Group PLC (LON:CLIN), Diurnal Group PLC (LON:DNL), McBride PLC (LON:MCB), Springfield Properties PLC (LON:SPR)

Economic data: UK unemployment

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