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HSBC profit falls 3.8% in Q2, Brazil sell-off agreed

HSBC announced on Monday that net profit fell 3.8% in the three months to June, as the company agreed to sell its Brazilian business for $5.2 billion to Brazil's Banco Bradesco.

business Updated: Aug 03, 2015 14:42 IST


HSBC announced on Monday that net profit fell 3.8% in the three months to June, as the company agreed to sell its Brazilian business for $5.2 billion to Brazil's Banco Bradesco.

Europe's biggest bank announced in June that it would cut its global workforce by up to 50,000 as it exits Brazil and Turkey.

The moves come as HSBC tries to boost profits and move past recent scandals, including the rigging of foreign exchange markets.

In the first half of 2015 net profit dropped 1.3%, although the company emphasised a rise in pre-tax profits, which went up 10% over the six months.

Quarterly profit fell to $4.36 billion from $4.54 billion in the same period last year, while the half yearly figure fell from $9.746 billion to $9.618 billion.

"The environment for banking remains challenging," said group chairman Douglas Flint, but added that the bank still held a "privileged position" in global trade and investment.

"We have the financial strength and the right people at all levels of the firm to make the most of the opportunities open to us," Flint added.

HSBC confirmed the Brazil sale in a separate statement to the Hong Kong bourse.

"The sale of HSBC Brazil represents a significant step in HSBC's stated goal to optimise its global network and reduce complexity," the statement said.

CEO Stuart Gulliver added: "I am pleased to be able to announce today a transaction which achieves both a solid financial outcome and swift delivery of one of our stated actions."

HSBC is also mulling the relocation of its London headquarters, with the review due to be completed by the end of the year, the report said.

Shares in the banking group were up 1.36 percent in early afternoon trading at HK$70.65 (US$9.11).

Legal storm

HSBC was forced in February to apologise for "unacceptable" failings at its Swiss division following allegations that the unit helped rich clients hide billions from the taxman.

It has faced a storm over claims that it helped clients from around the world dodge taxes on accounts containing 180 billion euros ($204 billion) between November 2006 and March 2007, in cases that are being investigated in several countries.

The Asia-focused lender is facing a French criminal probe over the affair.

In its report Monday HSBC said it was "cooperating with the relevant authorities" over the investigations.

"There are many factors that may affect the range of outcomes, and the resulting financial impact, of these investigations and reviews, which could be significant," the report said.

It added that further investigations could be possible, with a $1.14-billion provision for regulatory settlements put aside in the first half.

Separately, HSBC was fined late last year by US and British regulators for attempting to rig foreign exchange markets.

"We haven't had huge expectations from HSBC for a very long time," said Jackson Wong, associate director for Simsen Financial Group.

"The return to shareholders was pretty decent. One percent drop (in the first six months) was not that much," Wong told AFP.

But the bank will face uncertainties in the second half of the year he added.

"A lot of things could happen. For one, the (slowdown) of the Chinese market could have an impact on the world banking system.

"Also, by the end of this year we should be able to know whether they will relocate their headquarters from London to places such Hong Kong. It will be the focus."

First Published: Aug 03, 2015 14:39 IST