3rd Aug 2015 05:33
LONDON (Alliance News) - HSBC Holdings PLC on Monday said that its pretax profit increased by 10% in the first half, as a strong showing in Asia more than offset a USD1.14 billion charge for settlements and provisions in connection to legal matters, and that it has agreed to sell its Brazilian operations for USD5.2 billion.
HSBC reported a USD13.63 billion pretax profit for the six months to the end of June, up from the USD12.34 billion reported for the first half of 2014. HSBC's interim dividend remained at USD0.20 per share.
The results come nearly two months after the global banking giant revealed plans to save between USD4.5 billion and USD5.0 billion per year by 2017, cut risk-weighted assets by a quarter, and redeploy freed up capital to more profitable business, and sell its loss-making operations in Brazil and Turkey.
HSBC said it has agreed to sell its operations in Brazil to Banco Bradesco SA for USD5.2 billion in cash, with the precise amount depending on the net asset value of the business on completion of the deal, which is expected by the second quarter of 2016. HSBC will retain a corporate banking presence in the South American country to serve international clients.
Chief Executive Stuart Gulliver said that HSBC is focused on making "significant progress" on its strategy in the remainder of the year.
"Our performance in the first half of 2015 demonstrated the underlying strength of our business. Our diversified, universal model enabled the group to deliver increased profitability in spite of slow global growth," Gulliver said in a statement.
Results were hurt by USD1.14 billion charge for settlements and provisions in connection with legal matters. The charges come in addition to the USD1.19 billion previously set aside for authorities' investigations into alleged currency market manipulation in the final half of 2014.
Charges for customer redress in the UK, where HSBC has been caught up in mis-selling payment protection insurance and interest rate hedging products, fell to USD137 million from USD234 million.
The cost of past misconduct threatens to tarnish a year in which HSBC is celebrating 150 years since it was founded in Hong Kong to finance trade between Europe and Asia.
HSBC's reputation took a beating in February after allegations that its Swiss private banking unit helped wealth clients to aggressively avoid taxes were reported by several news organisations. In its annual report for 2014, HSBC said there had been "unacceptable" behaviour at the unit in the past.
Revelations about HSBC's Swiss private bank, which have led to a formal criminal investigation in France, followed fines from regulators in the UK and the US in November 2014 as part of a settlement that involved five other global banks.
London-based HSBC reiterated that it intends to conclude a review of the best place for its global headquarters by the end of the year.
By Samuel Agini; [email protected]; @samuelagini
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