HSBC Holdings PLC announced plans for a special dividend to shareholders after it reported lower-than-expected annual earnings.

HSBC Holdings PLC announced plans for a special dividend to shareholders after it reported lower-than-expected annual earnings.

"A solid net interest income performance reflected higher global interest rates, but there was also significant underlying growth throughout the company in important sectors, notably those connected to our worldwide network," stated CEO Noel Quinn.

The Asia-focused bank reported a pre-tax profit of $17.5 billion in the fiscal year ended December 31, down 7.3% from $18.9 billion the previous year, but slightly higher than the company-compiled market expectation of $17.5 billion.

"This was due to a net projected credit loss charge of US$3.6 billion compared to a net release of US$900 million last year, as well as an impairment of US$2.4 billion connected to the proposed sale of our retail banking business in France," Quinn explained.

Net interest income increased to $32.6 billion from $26.5 billion in 2021, above the market estimate of $32 billion and HSBC's own target of $32 billion.

The bank's common equity tier 1 capital ratio was 14.2% at the end of the year, down from 15.8% the previous year.

The big lender issued a second interim dividend of $0.23 per share, creating a total of $0.32 per share in 2022. The company is also considering paying a $0.21 per share special dividend as a primary use of the funds from the sale of HSBC Canada.

According to HSBC, the payout will take effect in early 2024, with any further excess money going towards organic growth and investment possibilities, as well as prospective share buybacks.

Going ahead, the bank is confident of meeting its 12% return on average tangible equity objective for 2023 and expects net interest income of at least $36 billion in 2023.

(Investing.com, Proactiveinvestors.co.uk, HSBC.com)