Nisha Gopalan is a Bloomberg Gadfly columnist covering deals and banking. She previously worked for the Wall Street Journal and Dow Jones as an editor and a reporter.

Almost any way you cut the numbers, HSBC Holdings Plc comes out a winner.

Europe's largest bank reported adjusted pretax profit Monday that rose 7 percent from a year earlier to $5.59 billion, beating analyst estimates. Not bad, right? But including one-time items, such as a loss from the sale of its Brazilian unit and foreign-currency movements, pretax profit tumbled 86 percent for the three months ended Sept. 30 to $843 million. Ouch.

The thing is, HSBC's large fan base in China means it can probably ride out even the strongest of headwinds.

HSBC has a policy of paying quarterly interim dividends on its ordinary shares. It has a pattern of three equal dividends, with a variable fourth. This time around, HSBC declared a third interim dividend of $0.10 per ordinary share, unchanged from the second quarter. Chief Executive Officer Stuart Gulliver said in a statement that:

Following a change in the regulatory treatment of our investment in BoCom , our common equity Tier 1 capital ratio increased to 13.9 percent. This is another action forming part of our ongoing capital management of the Group that reinforces our ability to support the dividend, to invest in the business and, over the medium term, to contemplate share buy-backs, as appropriate. 

HSBC has been veering away from its "progressive" dividend policy and toward a "sustained" payout path. That isn't surprising considering the lender has cut more than 87,000 jobs over the past six years, exited at least 80 businesses and reduced its once vast global footprint. It's also facing a slowdown in China, as well as in its core market of Hong Kong, where the latest property curbs will surely eat into its hefty mortgage-loan operations. What's more, the U.K. isn't a great place to be when the pound is falling post Brexit and you report in U.S. dollars.

Less Generous
HSBC has been raising its annual dividend but gains are leveling off
Source: Bloomberg

Lucky for HSBC, it has ready-made support in the form of mainland Chinese who buy the stock for its dividend yield.

The Shanghai-Hong Kong Stock Connect, which began in 2014, has consistently shown HSBC to be one of Chinese investors' favorite picks. A dividend that pays out four times a year is still better than what most people can get at home.

Popularity Contest
Net buying of HSBC on the Shanghai-Hong Kong Stock Connect as a percentage of total turnover surged in September
Source: Hong Kong Exchange, Bloomberg, JPMorgan Chase & Co.

HSBC's 6.8 percent dividend yield is higher than Bank of China Ltd. at 5.9 percent and Industrial & Commercial Bank of China Ltd. at 5.8 percent. Bank of Communications Co. comes in at just 5.3 percent.

Analysts at JPMorgan Chase & Co. have also pointed to a new class of buyer who is hungry for returns and should give HSBC an extra fillip -- Chinese insurance companies that since September have been allowed to buy Hong Kong-listed shares. The Shenzhen-Hong Kong Stock Trading Link that may launch as soon as this month should provide an added boost, too.

So while economic headwinds in major markets and, as Gulliver himself put it, an "uncertain regulatory environment" will continue to buffet the bank, its stock, at least, has an effective made-in-China windshield.

This column does not necessarily reflect the opinion of Bloomberg LP and its owners.

  1. Bank of Communications Co.

To contact the author of this story:
Nisha Gopalan in Hong Kong at

To contact the editor responsible for this story:
Katrina Nicholas at