HSBC prof­its higher on cost cut­ting, favourable mar­kets

Muscat Daily - - BUSINESS -

Hong Kong, China - HSBC’s prof­its rose in the first half of the year as it slashed costs and won sup­port from favourable mar­ket con­di­tions, the bank­ing gi­ant said on Mon­day

Net profit jumped ten per cent to al­most US$7bn in the first six months of the year com­pared to the first half of 2016, the group said in an earn­ings state­ment.

Pre-tax profit for the six months rose five per cent to US$10.2bn.

Out­go­ing chair­man Dou­glas Flint de­scribed the per­for­mance as ‘ex­tremely pleas­ing’ - com­ing af­ter a tur­bu­lent 2016 that re­sulted in huge write­downs and re­struc­tur­ing costs for the Lon­don-head­quar­tered bank as it laid off thou­sands of staff.

The Asia-fo­cused gi­ant has been on a re­cov­ery drive over the past two years, stream­lin­ing its op­er­a­tions and ex­it­ing un­prof­itable busi­nesses.

Like many global banks it has strug­gled to boost prof­its as China’s econ­omy slows and un­cer­tainty caused by Bri­tain’s loom­ing exit from the Euro­pean Union casts a shadow over the sec­tor.

In ad­di­tion, HSBC has grap­pled with stricter cap­i­tal rules, low in­ter­est rates de­spite fresh tight­en­ing - and scan­dals stem­ming from its own mis­be­hav- iour.

How­ever fol­low­ing Mon­day’s re­sults, chief ex­ec­u­tive Stu­art Gul­liver ex­pressed con­fi­dence in the out­look de­spite strains in­clud­ing Brexit un­cer­tainty.

“There is still en­gines for growth if you be­lieve in the long term story of China, Asia-Pa­cific, the ASEAN, the Mid­dle East,” he said. “There is still fur­ther up­side and ac­tu­ally we’re still prob­a­bly at the be­gin­ning of a [rate] tight­en­ing cy­cle,” he added.

Higher in­ter­est rates are good for banks as it leads to in­creased re­turns on the in­ter­est they make from prod­ucts in­clud­ing home mort­gages and credit card pur­chases.

HSBC also ben­e­fit­ted in the first half from im­prov­ing per­for­mances on global mar­kets, in­clud­ing record-highs for in­dices on Wall Street.

‘Mar­kets-based rev­enues ben­e­fited... com­mer­cial bank­ing cus­tomer ac­tiv­ity was ro­bust, wealth man­age­ment and in­sur­ance rev­enues were no­tably stronger in Hong Kong, and credit ex­pe­ri­ence glob­ally re­mained re­mark­ably sound’, HSBC said in its earn­ings re­lease.

‘As cen­tral bank in­ter­est rates edged higher, led by the US, we be­gan to ben­e­fit from im­proved mar­gins on our core de­posit bases, pro­vid­ing a wel­come en­hance­ment to the group’s rev­enue mix’, the lender added.

HSBC also an­nounced on Mon­day a share buy­back of up to US$2bn, ex­pected to be com­pleted in the sec­ond half of the year - help­ing its share price to rise two per cent to 758.8 pence in Lon­don af­ter­noon deals.

In Hong Kong, its shares closed up 2.62 per cent at US$10.06.

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