HSBC profits plunge 45% as Brexit bites
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. –
HSBC chair Douglas Flint feels the bank is entering a period of heightened uncertainty.