 |
HK Bank Giant Reports Rise in Profit Despite Global Economic Slowdown
The Hong Kong-based HSBC Holdings plc, one of the largest banking and financial services organizations in the world, announced that it achieved a 4-percent increase in profit in the first six months this year despite the slowdown in the world economy.
HSBC, also the heaviest blue chip in Hong Kong's stock market, reported its group pre-tax profit rose 4 percent to 5.435 billion U.S. dollars in the first half of this year from a year earlier after the market closed Monday. The blue chip fell 0.3 percent to 90.50 HK dollars (11.6 U.S. dollars) on today's close.
It also said that its basic earnings per share were 40 U.S. cents compared with 42 U.S. cents a year earlier and attributable profit went up 4 percent to 3.67 billion U.S. dollars.
"This has proved to be the case that we said at last year's result announcement that the outlook for 2001 was challenging," said the HSBC Group Chairman John Bond, commenting on the interim results.
Nevertheless, HSBC has increased its attributable profit, raised its first interim dividend and made good progress in developing its business, particularly its wealth management services, Bond said.
"We maintained cash operating profits before provisions at just over 5.6 billion U.S. dollars, the same as in the first half of 2000 which was our best half ever, though the impact of a strong U. S. dollar reduced the value of revenues and cost arising in other currencies and masked underlying growth," he added.
The HSBC Group's international network comprises some 6,500 offices in 79 countries and regions in Europe, the Asia-Pacific region, the America, the Middle East and Africa. The group's total assets at June 30, 2001 reached 692 billion U.S. dollars, an increase of 18 billion U.S. dollars or 3 percent since the end of 2000.
With listings on the London, Hong Kong, New York and Paris stock exchanges, shares in HSBC Holdings plc are held by around 190,000 shareholders in some 100 countries and regions.
However, Bond cautioned that in an environment of a lower rate of growth in most world's economies, volatile and falling equity market and declining confidence in the ability of certain emerging economies to maintain stability, banks' short-term revenue growth can only be achieved organically by increasing risk.
"We did not consider it prudent to follow this route," the HSBC chairman said. "Indeed, in expectation of a world economic downturn, we positioned our business more conservatively."
At the end of June, only 44 percent of HSBC's total assets were in loans, Bond said. In a period which called for consolidation rather than expansion, HSBC focused on initiatives to improve its operating margins. "We strengthened our capital position and maintained strong liquidity," he added.
The increase in operating costs reflects continued investment in building HSBC's brand and developing the new distribution channels and fee-based services important to its future. "The underlying strength of HSBC allows us to press ahead with our investment plans in weaker markets," Bond noted.
During the first half of 2001, HSBC opened additional branches in several countries, including eight in France, according to Bond.
Looking into the future, Bond said, the outlook for the financial services industry is unclear, there is evidence of increasingly fragile economic condition in certain emerging markets, and the performance of the U.S. economy remains pivotal and the Federal Reserve indicated last month that there are as yet signs of rebounding.
"The strength of our liquidity, our capital base and our loan loss reserves enable us to respond robustly to any events which may arise," Bond said. "Our international reach, combined with the quality of our staff and the strength of our customer base, gives grounds for confidence that we will continue to create value for our shareholders as opportunities arise," he concluded.
In This Section
|