HSBC's first-half profit rises 5 per cent, beating forecasts

Marco Green
July 31, 2017

HSBC, like many global banks, spent the years up to the 2008 financial crisis building its empire.

HSBC is carrying out a sweeping overhaul to increase profitability.

It was also fined $1.92 billion by United States prosecutors in 2012 to settle allegations that it failed to enforce anti-money laundering rules exposing it to exploitation by drug cartels and terrorist organisations. Europe's biggest bank said it expected to commence the latest buyback shortly for completion in the second half of 2017.

Since the first buy back was announced on August 3, 2016, HSBC's share price in Hong Kong has risen by 40.2 per cent.

In a statement to the Hong Kong stock exchange, HSBC group chief executive Stuart Gulliver said the profit growth could be seen across the bank's three main worldwide business lines: global banking and markets, retail banking and wealth management, and commercial banking.

HSBC said profits were up Monday in the first half of the year in what it called an "excellent" result after a turbulent 2016.

HSBC has kept its dividend payout ratio higher than many peers in recent years, including last year when a slowdown in banks' earnings growth prompted rivals such as Standard Chartered PLC to withhold payments.

For the first half of the year, net profit totalled $7 billion while revenue adjusted for currency fluctuations and one-off gains and losses rose 0.8 per cent to $26.1 billion.

Adjusted profit before tax of $143 million was $39 million or 21 percent lower as revenue decreased, partly offset by a reduction in costs.

HSBC won approval last month in China to establish an investment banking joint venture with a state-backed fund, ending a 20-month wait, making it the first such venture in China to be majority-owned by a foreign bank.

The bank's long-time chairman Douglas Flint will be succeeded by former AIA chief executive Mark Tucker, who will lead a search for a new chief executive.

Other reports by Click Lancashire

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