HSBC first-half pre-tax profit slumps 65pc

HSBC Holdings (0005) said today reported profit before tax in the first half of the year slumped 65 percent year-on-year to US$4.3 billion – below analysts’ expectations – due to the impact of the pandemic, falling interest rates, increased geopolitical risk and heightened levels of market volatility.

Reported revenue was down 9 percent to US$26.7 billion from the same period last year, while basic earnings per share slid from 42 US cents to 10 US cents.

"Our Asia franchise showed resilience, and our Global Markets business delivered strong growth compared with last year’s first half. Having paused parts of our transformation program in response to the Covid-19 outbreak, we now intend to accelerate implementation of the plans we announced in February. We are also looking at what additional actions we need to take in light of the new economic environment to make HSBC a stronger and more sustainable business," said HSBC chief executive Noel Quinn in a stock exchange filing.

"Current tensions between China and the US inevitably create challenging situations for an organization with HSBC’s footprint. We will face any political challenges that arise with a focus on the long-term needs of our customers and the best interests of our investors."

HSBC currently does not have plans to remove its headquarter from Britain, Quinn said, and the lender slashed headcount by 4,000 jobs in the first half, as part of its prior plan for a 35,000 job cut plan for the next three years.

Chief financial officer Ewen Stevenson said HSBC will provide more information on dividend policy on its annual report next year, which will very much depend on the economic outlook in 2021.

Quinn said he will not speculate possible US sanctions over national security law, the bank is required to comply with law and regulation where it operates. The bank hasn't seen capital outflow from the Asian market, including Hong Kong, which reported deposit growth in the first half, Stevenson said.