SIXH.L Share News (SIXH)

LONDON (Alliance News) - HSBC Holdings Monday reported a decrease in first half pretax profit that was a little worse than analysts expected, with the banking group continuing its efforts to replace revenue from businesses it has sold or discontinued.

HSBC is in the second stage of a strategy to streamline the group, having sold off or exited 74 businesses since 2011. It is cutting costs and increasing returns and dividends to shareholders. It has also highlighted its trade and receivables finance, payments and cash management, foreign exchange, and renminbi services as areas in which it wants to invest over the next three years.

In a statement, HSBC said it made a USD12.34 billion pretax profit in the six months ended June 30, compared with USD14.07 billion in the corresponding period last year. A group of 15 analysts polled by the bank had forecast on average a USD12.46 billion pretax profit in the first half. The miss came as revenue fell by 9% to USD31.17 billion, while operating expenses came down by 0.7% to USD18.27 billion. Loan impairment charges, a bright spot, fell to USD1.84 billion from USD3.12 billion, ahead of the consensus forecast of USD1.96 billion.

"This was a good performance in the face of further margin contraction, additional conduct provisions and lower Asia growth rates," said Mike Trippitt, an analyst at Numis Securities.

Earnings came under pressure due to a combination of pressure on the bank's investment banking division, Global Banking and Markets, which was hurt by low market volatility and client activity, as well as a drop in Retail Banking and Wealth Management underlying revenue due to the run-off of its higher yielding consumer mortgage lending portfolio, though its commercial and private banking divisions saw increases in pretax profit.

Regionally, HSBC experienced reduced pretax profit in Asia and Europe, which are its two largest earnings generators, as well as in Latin America, more than offsetting increases in the Middle East and North America.

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Markets: UK stocks are mixed, with indices trading in fairly tight ranges. The state bailout of Portugal's troubled Espirito Santo Bank appears to have returned calm to the market following last week's sell-off, while the mid-morning release of results from HSBC has provided a boost for the FTSE 100.

Futures markets indicate that Wall Street will open slightly higher Monday.

FTSE 100: up 0.5% at 6,711.32
FTSE 250: down 0.2% at 15,374.98
AIM ALL-SHARE: down 0.6% at 758.10
GBP-USD: up at 1.6825
EUR-USD: flat at 1.3422
GOLD: down at USD1,292.26 an ounce
OIL (Brent): down at USD104.87 a barrel
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Other Top UK Corporate News
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Quality-testing company Intertek reported lower profit for the first half of the year as the strength of sterling hit revenue earned abroad, but it predicted organic revenue growth in the second half of the year and beyond. The company reported a pretax profit of GBP119.8 million for the six months to the end of June, down from GBP127.9 million a year earlier, as revenue declined to GBP1.02 billion, from GBP1.08 billion. Revenue would have increased 2.9% at constant exchange rates thanks to acquisitions, with organic revenue at constant rates down 0.5%. It said sterling's strength knocked GBP89 million off its revenue.
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Aviva is planning to cut millions of pounds from its annual tax bill, the Financial Times reported online on Sunday. According to the FT, new Finance Director Tom Stoddard has pledged to cut tax expenses under the next stage of the insurer's turnaround. The newspaper cited comments made by Stoddard at a recent investor day at which he said the insurer has been too focused on producing pretax operating profit.
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esure group said its pretax profit edged up by 0.4% in the first half amid intense competition in the group's motor and home markets, while it complemented an increase in its interim dividend with the declaration of a special dividend. esure increased its interim dividend to 3.6 pence from 2.5p, and also said it will pay a 1.5p per share special dividend, increasing the total to 5.1p. In a statement, esure, the owner of the Sheila's Wheels brand, said it made a GBP57.1 million pretax profit in the six months ended June 30, compared with GBP56.9 million in the corresponding period last year. Total income increased by 1.4% to GBP286.2 million, as earned premiums, net of reinsurance, increased to GBP245.5 million from GBP240.2 million.
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Alent said its pretax profit increased in its first half, and it proposed to pay out a GBP42 million special dividend, as a reduction in revenue was offset by lower costs and expenses. The advanced surface-treatment plating chemicals and electronics assembly materials company said its pretax profit increased 3.7% to GBP41.8 million for the six months ended June 30, from GBP40.3 million in the previous year.
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Data-centres provider Telecity Group posted a rise in revenue and pretax profit in its first half on the back of strong demand in the European data-centre market. The firm said revenue rose 9.3% to GBP174.1 million, from GBP159.3 million a year earlier, with adjusted earnings before interest, taxation, depreciation and amortisation up 11% to GBP81.6 million against GBP73.8 million in 2013. On the back of the results, the company lifted its dividend by 29% to 4.5 pence from 3.5 pence a year ago.
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Ultra Electronics reported lower profit and revenue for the first half of the year, but reiterated that its defence markets are stabilising and it expects to "broadly" meet expectations for the full year because revenue will be weighted towards the second half. The defence, aerospace, security, transport and energy technology company reported a pretax, pre-items pretax profit of GBP50.5 million for the six months to end-June, down from GBP55.4 million a year earlier, as revenue declined to GBP341.0 million, from GBP367.7 million. Its pretax profit rose to GBP45.8 million, from GBP39.6 million, but this was mostly down to a GBP3.0 million profit on fair value movements on derivatives, compared with the GBP7.7 million loss it booked a year earlier.
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Manufacturing group Senior reported an increase in profit, mainly due to continuing strong growth in the commercial aerospace sector, the group's largest end-market, and improving demand from its principal land vehicle markets. The company also said Monday that Chief Executive Mark Rollins intends to retire during the first half of 2015. Recruitment for his successor has commenced. The Hertfordshire-based company posted pretax profit of GBP45.1 million for the six months ended June 30, up from GBP37.1 million a year earlier, as revenue crept up to GBP400.4 million from GBP399.3 million.
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Keller Group reported a 21% increase in pretax profit for the first half, despite tough market conditions in Canada, a market it has targeted over the last 18 months. The FTSE 250 engineering contractor posted pretax profit of GBP32.5 million for the six months ended June 30, up from GBP26.8 million a year earlier, as revenue rose 22% to GBP788.2 million from GBP644.6 million. Keller said all four of its divisions achieved strong revenue growth compared with the same period a year ago, despite an adverse currency translation impact. On the back of this, the company increased its interim dividend 5% to 8.4 pence from 8.0 pence a year earlier.
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Fidessa Group reported a 3.9% fall in half-year pretax profit, with growth at constant currency more than offset by sterling strength. In a statement, the trading software and services group said it made a GBP19.7 million pretax profit in the six months ended June 30, compared with GBP20.5 million in the corresponding period last year. Revenue fell to GBP137.1 million from GBP139.3 million, while operating expenses fell to GBP117.4 million from GBP118.6 million. Fidessa increased its interim dividend to 13.1 pence from 12.5p.
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AIM MOVERS
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Max Petroleum is a big gainer after it raised GBP37.1 million through a cash subscription by AGR Energy Ltd No.1, which gives the investor a 51% majority stake in the company. VariRx is up after its request to run clinical trials for its VAL201 cancer treatment was accepted by the UK's licensing authority. ProPhotonix is also up after tools and laser-marking company The 600 Group said it has acquired a 26.3% stake in ProPhotonix, financing the deal with a share issue. Kennedy Ventures is another gainer after it bought a 75% stake in African Tantalum (Pty) Ltd for GBP0.7 million in cash and shares, a company that has a conditional deal to buy a majority stake in a tantalite mine in Namibia. Rare Earth Minerals is up after it received initial positive results from sampling for rare-earth elements at its Greenland exploration licences. MoPowered Group is higher after it won contracts from the building supplies, tools and DIY sectors in the past few months. Tangiers Petroleum is down sharply after it confirmed the TAO-1 exploration well in the Tarfaya offshore block in Morocco has been unsuccessful and it will plug and abandon the well. Quindell is down after the Financial Times reported that the company has run into trouble over one of its largest contracts, a joint venture with RAC to place telematics devices in cars. The FT cited people familiar with the project.
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Top Economics And General
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UK construction activity grew at the fastest pace since 2007, exceeding the consensus estimate, led by increased house building work, results of a survey by the Chartered Institute of Purchasing & Supply and Markit Economics showed. The Markit/CIPS Construction Purchasing Managers' Index, or PMI, came in at 62.4 in July, marking the sharpest rise in construction since the summer of 2007 and exceeding the 62 reading expected by economists. The current score marked the fifteenth consecutive month of growth in construction. Residential construction activity recorded the steepest rise since November 2003 as funding conditions were favorable and demand for new housing starts remained strong.
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Eurozone producer prices continued to decline in June, but at a slower pace from prior year, Eurostat reported. Producer prices were down 0.8% year-on-year in June, following May's 1% decline. Producer prices were expected to drop again by 1%. Excluding energy, producer prices slipped 0.1% annually compared to a 0.2% drop in May. On a monthly basis, overall producer prices increased in June after decreasing every month of the year. Producer prices rose 0.1%, offsetting the 0.1% fall in May.
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The EU approved a plan to bail out Portugal's ailing Banco Espirito Santo, with the rescue expected to amount to EUR4.9 billion. "The adoption of this resolution measure is adequate to restore confidence in financial stability and to ensure the continuity of services and avoid potential adverse systemic effects," the European Commission, the EU's executive, said in a statement. "A disorderly resolution of BES could create a serious disturbance in the Portuguese economy," it added. The move comes two and a half months after Portugal exited a national bailout programme financed by the eurozone and the International Monetary Fund.
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A seven-hour humanitarian ceasefire called by Israel went into effect in most of the Gaza Strip on Monday, after an attack that killed 10 people at a UN-run school. The temporary ceasefire was to last from 10am until 5 pm in the entire enclave except for the area east of the town of Rafah in southern Gaza - a focal point of fighting since a botched attempt by Palestinian militants to snatch a soldier there on Friday. The Israeli army said it would "respond to any attempt to exploit this window to harm Israeli civilians and soldiers," a military statement said. Hamas, the Islamist movement in de facto control of Gaza, said the ceasefire was designed to "divert attention from the Israeli massacres" in the Gaza Strip.
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Rain and landslides blocking key roads hampered efforts to evacuate some 57,000 people left homeless by an earthquake that killed at least 391 in south-western China. Many among the estimated 1 million people affected by Sunday's 6.5-magnitude quake in Yunnan province felt hundreds of aftershocks by Monday morning. Rivers had been blocked by landslides in some areas, bringing the threat of floods, state media said.
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The outbreak of Ebola in West Africa is out of control, the director of the US Centers for Disease Control and Prevention said Sunday. But but he also said he was confident that it can be stopped. "We know how to stop Ebola now," Tom Frieden said in an interview with ABC News. He added that the government-funded CDC is "surging" its response to the outbreak and will send 50 public health employees to Guinea, Liberia and Sierra Leone to help stop the outbreak within the next 30 days.
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Afternoon Watchlist (all times British Summer Time)

14:45 US ISM New York index

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Tuesday's Key UK Corporate Events

Hill & Smith Holdings Half Year Results
LSL Property Services Half Year Results
Vernalis Half Year Results
Genel Energy Half Year Results
Liberty Global Q2 Results
Aggreko Half Year Results
888 Holdings Trading Statement
Inmarsat Half Year Results
BBA Aviation Half Year Results
T Clarke Half Year Results
Fresnillo Half Year Results
InterContinental Hotels Group Half Year Results
Meggitt Half Year Results
Pendragon Half Year Results
Rotork Half Year Results
SDL Half Year Results
Novae Group Half Year Results
Avocet Mining Half Year Results
Standard Life Half Year Results
S&U Trading Statement

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Tuesday's Key Economic Events (all times British Summer Time)

02:35 Japan Markit Services PMI
02:45 China HSBC China Services PMI
08:45 Italy Markit Services PMI
08:50 France Markit Services
08:55 Germany Markit Services
09:00 EU Markit Services PMI
09:30 UK Markit Services PMI
10:00 EU Retail Sales
13:55 US Redbook index
14:45 US Markit Services PMI
15:00 US Factory Orders
15:00 US IBD/TIPP Economic Optimism
15:00 US ISM Non-Manufacturing PMI

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