as brexit uncertainty bites
Last Updated : GMT 09:40:38
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Last Updated : GMT 09:40:38
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HSBC profits plunge

As Brexit uncertainty bites

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Themuslimchronicle, themuslimchronicleAs Brexit uncertainty bites

HSBC says pre-tax second-quarter profit sank 45 percent to $3.61 billion year-
Hong Kong - Arab Today

HSBC said Wednesday net profit plunged in April-June and that the bank was heading into "a period of heightened uncertainty" after Britain voted to leave the European Union.

Profit after tax sank 40 percent on-year to $2.61 billion, the firm said in a statement, but assured it had weathered the Brexit storm "securely". 

The firm announced a share buy-back of up to $2.5 billion for the second half of 2016, funded by the sell-off of its Brazil business, while it also said annual dividend payouts would be protected "for the foreseeable future".

However, group chairman Douglas Flint said UK business was now entering a new era as Britain negotiates its departure from the EU.

"It is evident that we are entering a period of heightened uncertainty where economic risks are being overshadowed by political and geo-political events," Flint said.

The shock vote on June 23 to leave the EU has raised fears about the long-term impact on the world economy, with warnings that Britain -- one of the world's biggest financial hubs -- could slip into recession in the current quarter.
Flint added that establishing fresh terms of trade with EU and global partners would be "complex and time-consuming". The fallout would require the bank to re-position in Europe, Flint said.

"Re-positioning our own European business once the future of the UK’s current 'passporting' arrangements for financial services is clarified in the upcoming negotiations will add to the very heavy workload already in place," he added.

- Volatility 'to continue' -

Group chief executive Stuart Gulliver predicted tough times ahead, saying volatility is "likely to continue for some time".

Pre-tax second-quarter profit was down 45 percent at $3.61 billion over the year, missing forecasts of $3.9 billion, according to Bloomberg News.

Pre-tax profits in the six months to June dived 29 percent year-on-year to $9.7 billion, the bank said, while net profit for the same period fell 28 percent year-on-year to $6.91 billion. Half-year revenues also slipped 4.5 percent to $27.87 billion.

The bank saw loan impairment charges soar 85 percent to $2.37 billion in the first half of 2016, attributing the rise to charges in the oil, gas and mining sectors.

Flint said the company had removed a target to achieve a 10 percent return on equity -- a measure of a firm's profitability -- from its agenda due to uncertainties and projections for an extended period of low interest rates.

HSBC last year announced a radical overhaul to cut costs that included shedding 50,000 jobs worldwide, exiting unprofitable businesses and focusing more on Asia.

The bank said Wednesday that its operating expenses were down since the cost-cutting drive -- they had reduced by four percent to $15.9 billion in the first half. 

It also said it would stick to its Asia-focused strategy, with southern China's Pearl River Delta a priority area.

"Nothing that has happened in this turbulent period casts doubt on the strategic direction and priorities we laid out just over a year ago," said Flint.

Source: AFP

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as brexit uncertainty bites as brexit uncertainty bites

 



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