HSBC banks solid half-year results

HSBC has reported solid first-half profits as it reaps the rewards of its global network and digital investment, though analysts highlighted a number of headwinds facing Britain's biggest bank.

HSBC's new chief executive John Flint. Picture: Contributed

The lender, which has a major presence in Asia, reported a pre-tax profit of $10.7 billion (£8.2bn) for the six months to the end of June, up from $10.2nm for the same period a year earlier.

Adjusted pre-tax profits dipped from $12.4bn to $12.1bn which the bank said was due to taking on more staff and expanding its digital network. Revenue for the period came in at $27.3bn, up 4.2 per cent year-on-year.

HSBC also announced that Jonathan Symonds, who is currently chairman of HSBC Bank, will become deputy group chairman of HSBC Holdings.

Unveiling the latest results, chief executive John Flint said: “HSBC is a strong business with a number of clear commercial advantages.

“In particular, we are a leading international bank with a network that gives us unparalleled access to high-growth markets, particularly in Asia and the Middle East.”

The bank said in June that it was aiming to simplify its business, while also investing billions in technology under Flint, who was appointed chief executive earlier this year.

It outlined a strategic plan, saying it will look to boost growth across its Asia business, complete the ring-fencing of its UK operations, boost its share of the mortgage market and improve customer service.

Steve Clayton, manager of the HL Select UK Income Shares fund at financial services group Hargreaves Lansdown, said: “HSBC is struggling to convince that its current restructuring to pivot the group toward Asia is delivering the hoped for pick-up in growth.

“Financially HSBC is in a strong place, with a common equity tier 1 ratio of 14 per cent and an advances to deposits ratio of just 72 per cent. The group has announced another quarterly dividend of 10 cents per share, exactly as expected.

“Return on equity though is still less than 9 per cent, showing the difficulties major banks face these days in trying to earn a high rate of return in an increasingly regulated financial world.”

He added: “The potential for growth from China and the wider south-east Asian region ought to be good and HSBC has long thrived from financing global trade flows.

“But in a world of tit-for-tat sanctions between the global powers, it could become harder for HSBC to benefit from its deep Asian roots.”

Jasper Lawler, head of research at London Capital Group, said the results from HSBC, which ranks as Europe’s biggest bank, made for a positive start to the week for European markets.