HSBC Profit up 10% as the Bank Sells Its Brazilian Arm

Interim Results 2015
August 3, 2015 Updated: February 15, 2016

HSBC announced today, Aug 3, better-than-expected results in the first half of 2015. The bank’s profit before tax is up 10% to US$13.63bn from US$12.34bn in the same period of 2014. Profit from Asia continued to dominate, accounting for 69.0% of the total. Total operating income climbed to US$39.79bn, compared with US$38.23bn in the first half of last year.

Just over a month ago, HSBC made public in a strategic update that promised massive job cuts and shifting of resources to more promising Asian markets. The sale of its loss-making Brazilian business on July 31 to main rival Bradesco for US$5.2bn marked the first step of the strategic move. Under its new strategy, the bank said it will also target growth in Asia by expanding its insurance business and its presence in China’s Pearl River Delta region.

Stuart Gulliver, HSBC’s Group Chief Executive said: “We are executing the actions that we announced at our investor update in June and our focus is on making significant progress during the remainder of the year.”

The bank’s first half results also contained US$1.43bn in provisions for legal proceedings and regulatory matters relating to past misconduct, including alleged manipulation of the foreign exchange market. While saying that it was pressing on with making structural changes required by UK regulators, HSBC did not provide an update on any decision to move its headquarters from the UK to Hong Kong but said that investigations were still in progress.

Profit from retail banking is up slightly to US$3.36bn from US$3.00bn, while commercial banking profit declined from US$4.81bn to US$4.52bn. Global private banking profit declined by 50% from US$0.36bn to US$0.18bn while other banking activities turned round from a loss of US$0.87bn in 2014 to profit of US$0.81bn.

A second interim dividend for 2015 of US$0.10 per ordinary share payable on Oct 2, 2015 is announced. This brings the interim dividends for 2015 to US$0.20 per ordinary share.

It was also announced that Irene Lee, current Executive Chairman of Hysan Development Company joined the Board on July 1 and Pauline van der Meer Mohr, president of the Executive Board of Erasmus University Rotterdam will be another addition to the Board effective on September 1.

Shares in HSBC have fallen more than 5 per cent since its strategic update in June. Following the result announcement, HSBC share price went up nearly 2% to close at HK$71.05 on a total share value turnover of HK$1.94bn on Monday Aug 3.