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Abu Dhabi, UAEMonday 19 November 2018

HSBC pre-tax profits top Dh51bn in first half

UK-based bank plans to grow the global behemoth by expanding in key Asian markets including China

HSBC voiced "cautious optimism" despite the China-US trade row. AFP
HSBC voiced "cautious optimism" despite the China-US trade row. AFP

Banking giant HSBC said on Monday that pre-tax profit rose 4.6 per cent to $10.7 billion (Dh51.05bn) in the first six months of the year and voiced "cautious optimism" despite the China-US trade row.

After wide-ranging cutbacks that saw 50,000 jobs axed in an overhaul announced in 2015, the bank said it was now hiring "more frontline staff" in its strongest businesses as it seeks new growth, according to AFP.

"We are investing to win new customers, increase our market share, and lay the foundations for consistent growth in profits and returns," said CEO John Flint.

The results met AFP analysts' expectations as they predicted the bank would turn around its bottom line.

Revenues were also up four percent at $27.3bn.

However, adjusted profit before tax of $12.1bn was down 2 per cent.

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The London-based bank said second-quarter adjusted revenue advanced 2 per cent from a year earlier to $13.7bn, below the average estimate among three analysts surveyed by Bloomberg. Costs, meanwhile, increased 7 per cent as Mr Flint stepped up investments in areas including technology.

Mr Flint, promoted to chief executive in February, plans to grow the global behemoth by expanding in key Asian markets including China and establishing the lender as a top-tier wealth manager. His plan earlier this year to invest $17bn to build its presence in the region and improving technology was met with a lukewarm reception, amid concern about how long cost growth would outpace revenue and hold back the dividend.

Like UK rival Standard Chartered, HSBC has struggled to consistently deliver revenue gains that outpace cost increases - what analysts refer to as positive jaws. Still, Mr Flint stuck to his projection that the bank will be able to bolster revenue faster than costs for the full year.

Finance director Iain Mackay told Bloomberg Television that costs are “absolutely in line” with where the company expected to be, adding that HSBC is being deliberate about investing in areas where it expects growth.

“We are sitting in a pretty sensible place,” he said.