After releasing its 2021 Q2 financial information, HSBC announced that it has a half-year pre-tax profit of more than twice what it posted for the first half of 2020. This comes after sharp recoveries for economies across the globe, with two of the biggest markets for the bank in Britain in Hong Kong, showing positive growth.
Despite the positive growth in profits, net revenues for the bank are reduced compared to the first half of 2020.
The first half of 2020 saw HSBC bring in $26.745 billion in revenue, compared to the first half of 2021, the bank brought in $25.551. Despite a drop in revenue, a big reason behind the increase in profit is that the bank didn’t have to put large sums of cash aside to cover bad loans caused by Covid-19. The reduction in loan-loss costs means that pre-tax profit increased by $4.318 billion in the first half of 2020 to 10.839 billion in 2021.
This means the pre-tax profit for the first half of 2021 has already eclipsed what HSBC brought in for the whole of 2020. With total pre-tax profit of $8.777 billion for 2020, HSBC feels that it is in a promising position moving towards the second half of 2021.
The Group Chief Executive of HSBC, Noel Quinn, said:
These are good results that reflect the return of growth in our main markets and marked progress in the execution of our strategy. We were profitable in every region in the first half of the year, supported by the release of expected credit loss provisions.
Quinn added:
I’m pleased with the momentum generated around our growth and transformation plans, with good delivery against all four pillars of our strategy. In particular, we have taken firm steps to define the future of our US and continental Europe businesses, and further enhanced our global Wealth capabilities.
The positive performance for the first half of 2021 means that HSBC has reinstated half-year dividends for shareholders. The bank will be awarding shareholders $0.07 per share, which is a noticeable increase from the zero dividend paid out for the first half of 2020. However, it is still below the $0.15 dividend paid out at the end of 2020.
In May, HSBC revealed its plans to exit its US domestic mass-market retail banking by closing more than half of the branches in its network and keeping the remaining ones as international wealth management centres.
The bank’s CEO shared HSBC plans with Reuters for acquisitions in Asia outside China of smaller companies to expand the company’ wealth management business.
HSBC has intentionally stayed away from the SPACs frenzy because of the high risk of regulatory crackdowns.
Earlier last month, HSBC joined the cross-currency swaps service of CLS and IHS Markit as its ninth settlement member.
