HSBC’s Q2 prof­its fall 3.8%, Brazil sell-off OK’d

The China Post - - WORLD BUSINESS -

HSBC an­nounced Mon­day that net profit fell 3.8 per­cent in the three months to June, as the com­pany agreed to sell its Brazil­ian busi­ness for US$5.2 bil­lion to Brazil’s Banco Brade­sco.

Europe’s big­gest bank an­nounced in June that it would cut its global work­force by up to 50,000 as it ex­its Brazil and Tur­key.

The moves come as HSBC tries to boost prof­its and move past re­cent scan­dals, in­clud­ing the rig­ging of for­eign ex­change mar­kets.

In the first half of 2015 net profit dropped 1.3 per­cent, although the com­pany em­pha­sised a rise in pre­tax prof­its, which went up 10 per­cent over the six months.

Quar­terly profit fell to US$4.36 bil­lion from US$4.54 bil­lion in the same pe­riod last year, while the half yearly fig­ure fell from US$9.746 bil­lion to US$9.618 bil­lion.

“The en­vi­ron­ment for bank­ing re­mains chal­leng­ing,” said group chair­man Dou­glas Flint, but added that the bank still held a “priv­i­leged po­si­tion” in global trade and in­vest­ment.

“We have the fi­nan­cial strength and the right peo­ple at all lev­els of the firm to make the most of the op­por­tu­ni­ties open to us,” Flint added.

HSBC con­firmed the Brazil sale in a sep­a­rate state­ment to the Hong Kong bourse.

“The sale of HSBC Brazil rep­re­sents a sig­nif­i­cant step in HSBC’s stated goal to op­ti­mize its global net­work and re­duce com­plex­ity,” the state­ment said.

CEO Stu­art Gul­liver added: “I am pleased to be able to an­nounce to­day a trans­ac­tion which achieves both a solid fi­nan­cial out­come and swift de­liv­ery of one of our stated ac­tions.”

HSBC is also mulling the re­lo­ca­tion of its Lon­don head­quar­ters, with the re­view due to be com­pleted by the end of the year, the re­port said.

Shares in the bank­ing group were up 1.36 per­cent in early af­ter­noon trad­ing at HK$70.65 (US$9.11).

Le­gal Storm

HSBC was forced in Fe­bru­ary to apol­o­gize for “un­ac­cept­able” fail­ings at its Swiss di­vi­sion fol­low­ing al­le­ga­tions that the unit helped rich clients hide bil­lions from the tax­man.

It has faced a storm over claims that it helped clients from around the world dodge taxes on ac­counts con­tain­ing 180 bil­lion eu­ros (US$204 bil­lion) be­tween Novem­ber 2006 and March 2007, in cases that are be­ing in­ves­ti­gated in sev­eral coun­tries.

The Asia-fo­cused len­der is fac­ing a French crim­i­nal probe over the af­fair.

In its re­port Mon­day HSBC said it was “co­op­er­at­ing with the rel­e­vant author­i­ties” over the in­ves­ti­ga­tions.

“There are many fac­tors that may af­fect the range of out­comes, and the re­sult­ing fi­nan­cial im­pact, of these in­ves­ti­ga­tions and re­views, which could be sig­nif­i­cant,” the re­port said.

It added that fur­ther in­ves­ti­ga­tions could be pos­si­ble, with a US$1.14-bil­lion pro­vi­sion for reg­u­la­tory set­tle­ments put aside in the first half.

Sep­a­rately, HSBC was fined late last year by U.S. and Bri­tish reg­u­la­tors for at­tempt­ing to rig for­eign ex­change mar­kets.

“We haven’t had huge ex­pec­ta­tions from HSBC for a very long time,” said Jack­son Wong, as­so­ciate di­rec­tor for Sim­sen Fi­nan­cial Group.

“The re­turn to share­hold­ers was pretty de­cent. One per­cent drop (in the first six months) was not that much,” Wong told AFP.

But the bank will face un­cer­tain­ties in the sec­ond half of the year he added.

“A lot of things could hap­pen. For one, the (slow­down) of the Chi­nese mar­ket could have an im­pact on the world bank­ing sys­tem.

“Also, by the end of this year we should be able to know whether they will re­lo­cate their head­quar­ters from Lon­don to places such Hong Kong. It will be the fo­cus.”

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