HSBC (HSBA) gave with one hand and took with the other when announcing its first-half results. With the proceeds of the sale of its Brazilian business to Banco Bradesco in July, management will buy back up to $2.5bn (£1.9bn) in shares during the second half of the year. However, tough economic times in core markets and expectations for an extended period of low interest rates have prompted the banking giant to remove a timetable for achieving its target 10 per cent return on equity, which it had expected to achieve by the end next year.
Loan impairment charges of $2.4bn were almost $930m higher than the same time the previous year, of which around a third was linked to a further deterioration in the Brazilian economy. As previously flagged, its investment banking operations were also hit by bad loans to the commodities sector.
Retail banking revenue from current accounts, savings and deposits increased 8 per cent to $2.9bn. However, reduced client activity meant income from wealth management products fell, depressing pre-tax profit from these two areas by 29 per cent to $2.4bn. Increased impairments as well as reduced demand for global trade and receivables finance offset growth in lending within the commercial banking business. Here, pre-tax profit was 5 per cent lower at $4.3bn.
Analysts at UBS expect tangible net assets per share of 770¢ at the December year-end, from 756¢ a year earlier.
HSBC (HSBA) | ||||
|---|---|---|---|---|
| ORD PRICE: | 499.4p | MARKET VALUE: | £99.5bn | |
| TOUCH: | 499.4-499.45p | 12-MONTH HIGH: | 596p | LOW: 414p |
| DIVIDEND YIELD: | 7.7% | PE RATIO: | 8 | |
| NET ASSET VALUE: | 960¢ | LEVERAGE: | 15.4 | |
| Half-year to 30 Jun | Total operating income ($bn) | Pre-tax profit ($m) | Earnings per share (¢) | Dividend per share (¢) |
|---|---|---|---|---|
| 2015 | 39.8 | 13.60 | 48 | 20 |
| 2016 | 35.3 | 9.71 | 32 | 20 |
| % change | -11 | -29 | -33 | - |
Ex-div: 11 Aug Payment: 28 Sep £1=$1.33 | ||||
