HSBC risk averse as H1 profit slides 5.4%
Print Edition
HSBC, one of the world’s largest banks, warned yesterday that fragile growth in the global economy and rising geopolitical tensions will keep it from taking on greater investment risks.
In its earnings update, HSBC said its net income fell 5.4 percent to US$9.46 billion in the first half of this year. The bank, which earns nearly two-thirds of its profit in Asia and is closely watched as a barometer of growth in the region, saw its pre-tax profit there fall by 15 percent.
Earnings from investment banking declined globally by 12 percent to just over US$5 billion.
Chairman Douglas Flint said that with economies still recovering from the 2008 economic crisis, it was not the time to take chances.
“At a time of residual concerns over the sustainability of economic growth in many major markets and with heightened geopolitical tensions apparent, the board supported management’s view that this was not the time to expand risk.”
HSBC also said it is being challenged by increasing regulation and the costs of implementing it.
“The demands being placed on the human capital of the firm and on our operational systems capabilities are unprecedented,” he said.
The bank said cost-cutting has made it leaner than when Stuart Gulliver took over as chief executive in 2011.
It has cut tens of thousands of jobs and dumped more than 60 non-strategic businesses.
The bank is now stronger and has a solid platform to grow, Gulliver said.
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