HSBC profit more than doubles in first half of year

Banking giant HSBC saw profit more than double in the first half of the year due to economic rebound in Hong Kong and Britain.

Profits before tax at the UK based bank rose to $10.8bn (£7.8bn), in comparison to $4.3bn during the same period last year. According to Europe’s biggest bank by assets, all regions were profitable, with the UK reporting pre-tax profits of over $2.1bn.

This comes as economy around the world emerges from impacts of the Covid pandemic.

HSBC chief executive Noel Quinn is “pleased with the momentum generated around our growth and transformation plans”. They are seeing “good delivery against all four pillars of [their] strategy”, particularly taking steps to define the future of US and continental Europe businesses.

The bank reinstated dividend payments to shareholders because it of a boost from the economic rebound in Britain and Hong Kong, its two biggest markets. Following the Bank of England scrapping curbs on pay outs to investors last month, it plans to pay seven cents per share.

However, the key factor behind increase in HSBC’s profits is that losses on loans during the pandemic are lower than expected. Most banks set money aside last year based on estimates of potential loss if customers were not able to repay loans, with HSBC putting $700m aside. Banks are now rolling back on that amount, which has boosted profitability more than anything else.

Future plans and investment

HSBC announced a restructuring in February last year, cutting 35,000 jobs as part of plans to reduce costs by $4.5bn by next year. The bank say its programme is still on track.

The banking giant also announced plans of around a $6bn investment in the region of Asia. It is targeting a “double-digit growth” in its wealth management and commercial banking drive. HSBC already generates the majority of its revenues from Asia, and singled out markets such as Singapore, China and Hong Kong for growth.

In January, the bank founded in Hong Kong faced accusations from UK MPs of “aiding and abetting” China’s crackdown in Hong Kong. Allegations included the bank acting politically and being too close to Chinese authorities. This is because the bank froze accounts belonging to Hong Kong pro-democracy politician Ted Hui and his family. Mr Quinn faced the Foreign Affairs Committee, who claimed the bank turned a blind eye to the situation. Defending the bank, Mr Quinn responded saying, “I can’t cherry-pick which laws to follow”.

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