HSBC suffered a 34% drop in pre-tax profit to 8.8 billion US dollars (£6.2 billion) for the year ending December 31, though Europe’s largest bank still managed to beat estimates.

The bank, which is weighed down by loan losses, said in its annual results it will resume paying a dividend of 0.15 dollars (£0.11) per share despite the drop.

Pre-tax profit was down from 13.3bn dollars (£9.4bn) for the same period in 2019, though US financial services firm Jefferies noted that result was 23% better than market expectations.

Meanwhile, the adjusted profit before tax of 12.1bn dollars (£8.6bn) fell 76% on the year before.

The bank reported an adjusted revenue of 50.4bn dollars (£35.8bn), representing a fall of just 8% on 2019’s 54.9bn dollars (£39bn), with shares shooting up 3.3% in early trading in Hong Kong following Tuesday’s announcement.

HSBC said its strategy for the future would include shifting capital to Asia, where it makes the majority of its earnings.

The bank is one of many businesses to be caught in the split between China on one hand and Europe and the US on the other.

In the UK, it had been criticised for endorsing a law that has allowed Chinese leaders to crack down on pro-democracy activists in Hong Kong.

Meanwhile the company cannot afford to lose business in China, which accounts for a large proportion of its profits.

“Right now the bank is walking a tightrope between being seen to uphold new controversial laws imposed by Beijing and not provoking a retail consumer backlash in Hong Kong which could cause significant damage financially and in terms of its reputation,” said Hargreaves Lansdown analyst Susannah Streeter.

Group chief executive Noel Quinn said the company’s mandate in 2020 was to “provide stability in a highly unstable environment for our customers, communities and colleagues”.

He added: “I believe we achieved that in spite of the many challenges presented by the Covid-19 pandemic and heightened geopolitical uncertainty.

“Our people delivered an exceptional level of support for our customers in very tough circumstances, while our strong balance sheet and liquidity gave reassurance to those who rely on us.

“We achieved this while delivering a solid financial performance in the context of the pandemic – particularly in Asia – and laying firm foundations for our future growth.”

Last month the bank announced it would close 82 branches across the UK after the pandemic led to a greater shift to online banking, though it did say the closures were not entirely related to the lockdowns and restrictions introduced.