HSBC Increased Profit By 268% In The First Half Of 2021

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HSBC Holdings plc (NYSE:HSBC) earned $7.2 billion in the first half of the year, which represents a 268% increased profit compared to the same period in 2020.

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HSBC's soaring earnings

Between January and June, HSBC’s revenue shrank by 4.46% to $25.5 million, which the company attributed to the interest rate reductions last year and the falling income of its markets and securities.

Noel Quinn, HSBC’s Group Chief Executive, said in a statement quoted by CNBC: “We were profitable in every region in the first half of the year … This performance enables us to pay an interim dividend for the first six months of 2021.”

In the income statement submitted to the Hong Kong Stock Exchange, Quinn also said that the bank has “returned to growth” in its main markets.

In fact, according to HSBC’s geographical breakdown in terms of gross profit, the bank achieved a positive result especially in Asia, its main market, where its pre-tax earnings grew by 64% to $6.9 billion. In Europe, HSBC managed to climb out of losses to record a gross profit of nearly $2 billion.

In North America, the bank’s pre-tax earnings rose 7.4% to $10.8 million, while in the Middle East and North Africa it grew 6.7%, and in Latin America, 3.7%.

Heading into 2021 H2

Quinn said that a brighter economic outlook has allowed the bank to start releasing provisions that were set aside for potential loan losses. That was the force behind the bank’s improved profitability.

Regarding its solvency ratio, HSBC stood at 15.6% by the end of June –which is 0.3 points below 2020– partly due to an increase in risk-weighted assets derived from the growth in loans –which account for $21.5 billion.

This raised the total net to $1.06 trillion at the end of the semester.

Meanwhile, total deposits stood at 1.67 trillion by the end of June, accounting for a year-on-year increase of 8.9%. Upon such progress, HSBC’s board of directors has approved a dividend of $0.07 per ordinary share.

Heading into the second half of 2021, Quinn highlights the inertia in the group’s growth and transformation plans, especially in its U.S. and continental Europe businesses. He warns, however, that there are still uncertainties derived from the pandemic that in recent months have put billing under pressure.

“Net interest margin, a measure of lending profitability, was 1.21% in the first half of 2021. That’s 22 basis points lower than the same period last year.”