Banking bounceback continues as HSBC interim profits more than double
HSBC has said it will pay an interim dividend to shareholders after revealing that profits more than doubled for the latest half year.
The banking giant has reported pre-tax profits soaring to $10.8 billion (£7.8bn) for the six months to June, compared with $4.3bn for the same period in 2020.
The profit figure came in significantly ahead of analysts' expectations, with experts forecasting that it would come in at around $9.4bn. HSBC said it was buoyed by profit growth across all regions, highlighting growth in Asia and strong profits in its UK bank.
Meanwhile, there was a 4.5 per cent year-on-year drop in company revenues to $25.5bn. It said this was driven by lower interest rates and reduced sales through its markets and security services operation.
The bank, which earlier this year launched a £650 million fund to help smaller firms in Scotland flourish, has also announced that it will hand shareholders an interim dividend of 7 cents per ordinary share after payouts were put on hold during the pandemic.
Group chief executive Noel Quinn said: "These are good results that reflect the return of growth in our main markets and marked progress in the execution of our strategy.
"I'm pleased with the momentum generated around our growth and transformation plans, with good delivery against all four pillars of our strategy.
"In particular, we have taken firm steps to define the future of our US and continental Europe businesses, and further enhanced our global wealth capabilities.
"We are focused on executing the growth and transformation plans we announced in February."
Susannah Streeter, senior investment and markets analyst at Hargreaves Lansdown, said: "The banking bounceback has continued, with HSBC doubling first-half pre-tax profits as economies come out of their defensive hiding places and the spectre of bad debt recedes.
"As well as expanding its overall wealth business, the bank has been shifting to Asia to try and sniff out higher returns, moving capital investment and staff from Europe and the US.
"Although recovery in the region has so far been good news for HSBC's profits, it has faced reputational headwinds over accusations it was too close to Chinese authorities, which have cracked down on pro-democracy protesters in Hong Kong.
"Worries are now rife that there could be a downturn in investment due to Beijing's crackdown on tech and online educational firms in particular."
Analyst Gary Greenwood of Shore Capital said: "While forecast upgrades should be a positive catalyst for the shares, we note the muted reaction so far to similar upgrades elsewhere in the sector as the market continues to worry about the macro environment (notably inflation and political risks). That said, HSBC has been a relative underperformer recently and, in absolute terms, its shares are beginning to offer good value, in our view.
"Both our own forecasts and those of consensus moved up materially following the better-than-expected Q1 results – and we expect a further upgrades following this update.
"By way of indication, simply taking the Q2 beat and adding this in would result in full year consensus adjusted [pre-tax profit] increasing to around $19.8bn and reported [earnings per share] increasing to around $0.51. This would imply a payout ratio of 49 per cent based on our current dividend forecast for the full year.”
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