|
 |
| HSBC says interim profits dive, warns on outlook |
|
Time is GMT + 8 hours
Posted: 4-Aug-2008 22:49 hrs |
|
| HSBC branding in a London branch of the global bank. HSBC said that its net profit dropped 29 percent during the first half because of ballooning credit writedowns and bad consumer debts. |
| |
|
|
Global bank HSBC said on Monday that its net profit dropped 29 percent during the first half because of ballooning credit writedowns and bad consumer debts.. Europe's biggest bank by stock market value warned that the outlook remained "highly challenging" as it reported profit after tax totalling 7.72 billion dollars (5.0 billion euros) in the six months to June 30, compared with net profit of 10.90 billion dollars in the same period of 2007.. Loan impairment charges and other credit risk provisions surged 58 percent to 10.06 billion dollars in the six months to the end of June, from 6.35 billion dollars previously, HSBC added in a results statement.. "The first half of 2008 saw the most difficult financial markets for several decades, marked by significant declines in profitability throughout much of our industry, with consequent recapitalisation and restructuring," HSBC chairman Stephen Green said in comments accompanying the earnings release.. "HSBC was not immune from the turmoil," he added.. The bank said the outlook was uncertain because of slowing global economic growth, fading consumer confidence and faltering housing markets around the world.. In Europe, Asia-Pacific and Latin America, HSBC said profits rallied strongly in the first half of 2008.. But the US division suffered at the hands of the collapsed American subprime home loan sector. HSBC's North Ameria unit had a pre-tax loss of 2.90 billion dollars, which compared with a profit of 2.44 billion last time around.. "The outlook for the near term remains highly challenging with significant uncertainty," said Green.. "Globally, consumer confidence is declining and despite the short-term success of the recent fiscal stimulus, the US economy continues to be weak, driven by continuing housing market difficulties.. "The UK and other economies in Europe which had enjoyed housing market booms, have also weakened. The decline in credit availability is accelerating this process," Green added.. Investors are on edge about the cost of write-downs caused by the US subprime or high-risk housing crisis and the subsequent tightening of global lending conditions.. HSBC said that its pre-tax profits fell 28 percent to 10.2 billion dollars during the reporting period, while group income grew two percent to 42.91 billion dollars.. British banks HBOS and Lloyds TSB said last week that their interim profits plunged as they felt the chill from the credit crunch and a troubled domestic property market.. Green added on Monday: "Ultimately the real economy will recover from this crisis, although it may get worse before it gets better.". He described the bank's first half as a "resilient" performance in the face of poor prevailing market conditions, aided by its strong presence in Asia.. "In the emerging markets, where HSBC is the leading international bank, growth remained strong in the period as real asset prices continued to rise and infrastructure development continued to boost economic growth, which supported consumer confidence and spending," Green said.. In early Monday trade, HSBC shares fell 2.54 percent to 815.75 pence on London's FTSE 100 index, which was down 0.03 percent at 5,353.20 points.. HSBC also said on Monday that it wanted to push forward with the purchase of half of South Korea's sixth-biggest bank despite the passing of a completion deadline in July.. HSBC had agreed last September to pay 6.3 billion dollars in cash for 51.02 percent of Korea Exchange Bank from US private equity fund Lone Star.. The sale has been stuck in limbo since then because of an ongoing probe by South Korean regulators into Lone Star's purchase of a KEB stake in 2003. — AFP
|
