HSBC’s profits surge to $ 5.1 billion as the global economy slumps

HSBC Holdings PLC update

HSBC has become the latest European bank to reopen dividends to cover coronavirus pandemic-related credit losses and reduce its reserves, with near-second quarter earnings as the outlook for the global economy brightens. It increased 5 times.

Banks announced on Monday that they had canceled an additional $ 300 million in credit, saying pre-tax profits surged from $ 1.1 billion to $ 5.1 billion, exceeding expectations of $ 3.7 billion. That was in stark contrast to the billions of dollars. Bad debt costs It took because the coronavirus swept the world last year and effectively wiped out net income.

HSBC released about $ 700 million in non-performing loan reserves this year, but holds about $ 2.4 billion in coronavirus-related reserves, paying attention to recovery as Delta variants spread. ..

“In the first half of this year, we made a profit in all regions. [and] Noel Quinn, CEO, said in an interview.

The bank expects interest rates in the US and UK to rise in 2022 or 2023, adding that this could significantly increase earnings at one of the world’s largest depositors.

Banks were affected by ultra-low interest rates, trade slowdowns and global blockades, marking a turnaround from the harsh conditions of 2020, when HSBC’s annual profits plummeted 45%.

A London-based bank has announced an interim dividend of 7 cents per share, worth about $ 1.4 billion.Bank of England Removed restrictions Regarding payments to shareholders in July, the sector has determined that it is resilient enough to withstand the further shock from Covid-19. However, unlike some peers, HSBC has not announced a share buyback program.

Bank stock prices in Hong Kong rose 1.6% on Monday.

HSBC’s UK lenders were a bright spot, turning from a loss of $ 857 million last year to a profit of $ 1.1 billion. This was driven by the region’s largest credit loss release and a record quarter for mortgages. Global Home Price Boom..

Despite the recovery in profits, lower interest rates in Asia and poor performance of investment banks compared to other companies in the same industry reduced earnings by 4% to $ 12.6 billion.

According to Jeffreys analyst Joseph Dickerson, the deal was a major “weakness” in the outcome. Bond income plummeted 59% and foreign exchange fell 34%. This reflects the less active market compared to the same period last year and the lack of overseas travel during the pandemic.

Similarly, M & A advice and capital market revenues have fallen 7% compared to the significant gains in recent weeks. At rival Barclays, 160% surge, UBS increased 68%. This resulted in a 23% decrease in overall revenue for the division.

Despite these setbacks, HSBC raised £ 376 million in the amount reserved to pay bonuses in the quarter, despite a 3,500 decrease in unit staff levels this year.

“There are no numbers related to us. [the investment bank] We are on track from 2019 to 2021. [whereas] 2020 was an exceptional year, “said Chief Financial Officer Ewen Stevenson. “Last year we withdrew 20% of payments, so we need to respond to competitive pressure.”

Investment banks have raised their junior salaries to more than $ 100,000 in recent months in response to industry complaints. Harsh working conditions — Especially long hours from home during a pandemic — and a war for talent.

Under Quinn, HSBC has begun restructuring its vast global business, saving $ 4.5 billion and promising to cut 35,000 jobs.This year US consumer business deficit And the French retail bank will release its capital to invest in Asia.

We have also launched a $ 6 billion plan to expand our wealth business in Asia. moved Some of the top executives from London to Hong Kong.

HSBC is more than any other global lender Political punching bag As Beijing cracked down on Hong Kong during the US-China trade war, it faced doubts about its future. Quinn vowed not to “flip-flop” the strategy every time tensions reignited.

These tensions have not subsided under US President Joe Biden. China plans to introduce a law in Hong Kong that may prohibit foreign companies and individuals operating in financial hubs from complying with sanctions against it.

was suggested Sanctions Act It can cause greater uncertainty and more problems for multinationals like HSBC caught along the way.

“As an international bank, you need to navigate the laws of all the markets in which you do business,” Quinn said of the proposed policy. “Sometimes they are complicated, [but] We have been navigating complex sanctions for the past decade. “

HSBC’s profits surge to $ 5.1 billion as the global economy slumps

Source link HSBC’s profits surge to $ 5.1 billion as the global economy slumps

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