HSBC quarterly profit rises in recovery from dismal pandemic | World Weekly
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HSBC said it would pay an interim dividend after its pre-tax profit more than quadrupled to $5.1 billion in the second quarter.
Europe’s largest lender benefited from an improving global economic outlook as it continued to cancel provisions for credit losses during the depths of the coronavirus pandemic that hit its performance in 2020.
The second-quarter numbers, announced on Monday, easily beat analyst estimates, which had forecast revenue of about $3.7 billion, despite a slight dip in revenue. The bank also boosted its investments, notably with a $6 billion plan to grow its wealth business in Asia. Revenue was $12.6 billion for the quarter, down from $13.1 billion in the same period last year.
“These are good results that reflect the return of growth in our key markets and significant progress in implementing our strategy,” HSBC CEO Noel Quinn said. “We generated gains in every region in the first half of the year, buoyed by the ECL issuance.”
HSBC canceled another $300 million in provisions for bad debt during the pandemic in the second quarter. It has now written off $700 million in reserves this year, bringing its total growing reserves down to about $2.4 billion.
This helped boost net profit for the first half of 2021 to $10.8 billion, an increase of about 150 percent over the same period last year.
The performance marks a turnaround from a bleak 2020, when banks grappled with ultra-low interest rates, a slowdown in trade and the fallout from unprecedented global shutdowns. Last year, HSBC’s annual profit fell 45 per cent.
HSBC’s profit attributable to common shareholders was $3.4 billion in the second quarter, up from $192 million in the same period last year.
The London-based bank announced an interim dividend of 7 cents per share on Monday. The Bank of England removed restrictions on bank dividend payments in July, deeming the sector resilient enough to withstand any further shocks from Covid-19.
HSBC said it continued to accelerate its strategic priorities in the second quarter, completely withdrew from its troubled US banking operation and sold the French retail bank. The withdrawal from the slow-growing US and European divisions was part of the bank’s efforts to achieve about $4.5 billion in cost savings and 35,000 job cuts.
The lender also appointed new co-chairs for its Asia Pacific business in June after Peter Wong, who had been the region’s CEO for more than a decade, stepped down in order to take on the role of non-executive director. The bank is also in the process of relocating four of its senior executives from the UK to Hong Kong as it continues to accelerate its strategic shift to Asia.