HSBC first-half profits more than double, resumes dividends

·3-min read
The results are a shot in the arm for Asia-reliant HSBC and beat analyst estimates

HSBC on Monday said it would resume paying dividends to shareholders after first-half profits more than doubled as an ongoing restructuring and pivot to Asia continues to pay off.

Reported profit before tax rose $6.5 billion to $10.8 billion while reported profit after tax increased $5.3 billion to $8.4 billion.

The results, which beat analyst estimates, are a shot in the arm for the Asia-reliant lender after a tumultuous 2020 that saw its fortunes take a hammering from the coronavirus and simmering geopolitical tensions.

The London-headquartered giant makes the vast majority of its profits in Asia.

But in a sign of wider group health, HSBC said it managed to turn a profit in its Europe and US units which have been underperforming in recent years.

"We were profitable in every region in the first half of the year, supported by the release of expected credit loss provisions," chief executive Noel Quinn said in the bank's results statement.

HSBC said it would also pay an interim dividend of $0.07 per ordinary share for the first half of the year.

British regulators last year ordered banks to suspend payouts as the coronavirus tore through the global economy to shore up liquidity.

But last month they relaxed those "temporary guardrail" measures.

HSBC is one of the biggest dividend payers in European banking, and after a year of restrictions is expected to set aside more than any of its rivals this year and next, according to estimates collated by Bloomberg Intelligence.

- Major restructuring -

HSBC shares were trading up 3.6 percent in Hong Kong during the lunch break when the results were released.

Like all banking giants HSBC was battered by the coronavirus last year, with a 30 percent plunge in 2020 profit.

Under Quinn, the bank has embarked on a dramatic restructuring, rolling out plans to cut its workforce by about 35,000 to drive down costs and to refocus on its most profitable areas -- Asia and the Middle East.

HSBC makes 90 percent of its profit in Asia, with China and Hong Kong the major drivers of growth.

In February it published a new strategy laying out plans to redouble its attempt to seize more of the Asian market.

Weighed down by low interest rates, it is planning to seek out more fee-based income, especially wealth management for Asia's increasingly affluent.

"We are focused on executing the growth and transformation plans we announced in February," Quinn said.

HSBC's results struck a cautiously optimistic note for the future but noted that the ongoing coronavirus pandemic continued to weigh on the global economy.

There were signs borrowing was on the up, with the bank predicting mid-single-digit lending growth for the full year while credit losses for the year were "expected to be materially lower than our medium-term range".

"Uncertainty remains as countries emerge from the pandemic at different speeds, government support measures unwind and new virus strains test the efficacy of vaccination programmes," the bank added.


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