HSBC prof­its plunge 45% as Brexit bites

The Myanmar Times - - International Business -

HSBC de­clared yes­ter­day that pre­tax prof­its al­most halved in April-June and that the bank was head­ing into a “pe­riod of height­ened un­cer­tainty” af­ter Bri­tain voted to leave the Euro­pean Union.

Profit af­ter tax sank 40 per­cent on-year to US$2.61 bil­lion, the firm said in a state­ment, but as­sured it had weath­ered the Brexit storm “se­curely”. The read­ing missed fore­casts for $3.9 bil­lion profit, ac­cord­ing to Bloomberg News.

The firm an­nounced a share buy-back of up to $2.5 bil­lion for the sec­ond half of 2016, funded by the sell-off of its Brazil busi­ness, while it also as­sured that an­nual div­i­dend pay­outs would be pro­tected “for the fore­see­able fu­ture”.

How­ever, group chair Dou­glas Flint said UK busi­ness was now en­ter­ing a new era as Bri­tain ne­go­ti­ates its de­par­ture from the EU.

“It is ev­i­dent that we are en­ter­ing a pe­riod of height­ened un­cer­tainty where eco­nomic risks are be­ing over­shad­owed by po­lit­i­cal and geo-po­lit­i­cal events,” Mr Flint said.

He added that es­tab­lish­ing fresh terms of trade with EU and global part­ners would be “com­plex and time-con­sum­ing”.

The fall­out would re­quire the bank to re-po­si­tion in Europe, Mr Flint said.

Pre-tax prof­its in a tur­bu­lent six months to June dived 29pc to $9.7 bil­lion year-on-year, the bank said, while net profit for the same pe­riod fell 28pc on-year to $6.91 bil­lion. Half-year rev­enues also slipped 4.5pc to $27.87 bil­lion.

The bank saw loan im­pair­ment charges soar 85pc to $2.37 bil­lion in the first half of 2016, at­tribut­ing the rise to charges in the oil, gas and min­ing sec­tors.

HSBC last year an­nounced a rad­i­cal over­haul to cut costs that in­cluded shed­ding 50,000 jobs world­wide, ex­it­ing un­prof­itable busi­nesses and fo­cus­ing more on Asia.

The bank said yes­ter­day that its op­er­at­ing ex­penses were down since the cost-cut­ting drive – they had re­duced by 4pc to $15.9 bil­lion in the first half.

It also said it would stick to its Asia-fo­cused strat­egy, with south­ern China’s Pearl River Delta a pri­or­ity area. –

Photo: AFP

HSBC chair Dou­glas Flint feels the bank is en­ter­ing a pe­riod of height­ened un­cer­tainty.

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