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(Alliance News) - HSBC Holdings PLC on Monday reported first half profit more than doubled from a year before, with its Europe and US operations returning to profit and the bank pointed to signs of personal and commercial lending growth.
In the six months to June 30, the Asia-focused lender reported pretax profit of USD10.84 billion, leaping from USD4.32 billion a year before.
Helping to improve the bank's interim profit was a USD719 million credit release, swung from the mammoth USD6.86 billion provision set aside in the first half of 2020 in preparation for the economic effects of the pandemic to cause loans to not be repaid.
Revenue, however, slipped 4.9% to USD25.55 billion in the recent six months from USD26.75 billion a year before.
"This was due mainly to the impact of interest rate cuts during 2020 on our deposit franchises in all three global businesses. However, our lending pipeline began to translate into business growth in the second quarter and we further strengthened that pipeline during the half-year," HSBC explained.
Net interest margin worsened to 1.21% from 1.43%.
Chief Executive 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. Our lending pipeline began to translate into business growth in the second quarter and we further strengthened that pipeline during the half. This performance enables us to pay an interim dividend for the first six months of 2021."
HSBC declared an interim dividend of 7 US cents. Earlier in July, the Bank of England removed restrictions on large UK banks paying dividends. The central bank's Prudential Regulation Authority said the restrictions are "no longer necessary and have been removed with immediate effect".
Regionally, HSBC's key Asia operations saw pretax profit drop to USD6.94 billion from USD7.37 billion, but the bank saw better fortunes elsewhere.
In Europe, it swung to a profit of USD1.97 billion compared to last year's USD3.06 billion loss. In the Middle East & North Africa, HSBC booked a USD723 million profit versus a USD26 million loss. In North America, profit rose sharply to USD805 million from USD23 million, and in Latin America profit surged to USD407 million from USD12 million.
HSBC ended the first half with a loan book of USD1.060 trillion, up from USD1.019 at the same point the year before, and up from USD1.038 trillion six months earlier.
Customer deposits improved to USD1.669 trillion from USD1.532 trillion a year before, and up from USD1.642 trillion at the end of 2020.
The lender's CET1 ratio stood at 15.6% at June 30, up from 15.0% a year before, but down from 15.9% at the end of 2020.
Turning to units, Wealth & Personal Banking adjusted profit surged to USD3.86 billion from USD1.66 billion, while Commercial Banking profit soared to USD3.38 billion from USD118 million and Global Banking & Markets improved to USD3.31 billion from USD2.57 billion.
Quinn continued: "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 bank noted there are "emerging signs of unsecured personal lending and commercial lending growth". It expects mid-single-digit lending growth for 2021.
Shares in HSBC were 2.0% higher in Hong Kong on Monday.
By Paul McGowan; paulmcgowan@alliancenews.com
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