HSBC's profit hike reflects $4.3bn (£2.7bn) of gains from disposals. Adjust for that, and factor in a $1.3bn charge for UK customer redress (mis-selling payment protection insurance and interest rate products) and another $0.7bn to cover US fines for anti-money laundering failures, and underlying pre-tax profit fell 3 per cent to $10.6bn. Moreover, the shares are demandingly rated for the sector.
Still, HSBC's half-year impairment charge did fall 9 per cent year on year to $4.8bn. That significantly reflected a 29 per cent impairment charge fall in North America, to $2.2bn, as the former Household International operation continued to run-down and after the card and retail service unit was sold. But adjust for disposals-related income and North American pre-tax profits slipped to $21m from $483m. And, despite a 12 per cent fall in the European impairment charge, the bank reported a $667m pre-tax loss there.
It's a different story in Asia, where bad debts remain modest. Helped by the sale of shares in two Indian banks, pre-tax profit in Hong Kong rose 22 per cent to $3.76bn while, at the rest of Asia operation, pre-tax profit jumped 17 per cent to $4.37bn.
Investec Securities expects full-year EPS of 84.5¢ (91.7¢ in 2011).
HSBC (HSBA) | ||||
|---|---|---|---|---|
| ORD PRICE: | 536.9p | MARKET VALUE: | £98bn | |
| TOUCH: | 536.9-537p | 12-MONTH HIGH: | 625p | LOW: 456p |
| DIVIDEND YIELD: | 4.9% | PE RATIO: | 10 | |
| NET ASSET VALUE: | 908¢* | |||
| Half-year to 30 Jun | Pre-tax profit ($bn) | Earnings per share (¢) | Dividend per share (¢) |
|---|---|---|---|
| 2011 | 11.5 | 51.0 | 21.0 |
| 2012 | 12.7 | 45.0 | 23.0 |
| % change | +10 | -12 | +10 |
*Includes intangible assets of $28.9bn, or 158¢ a share £1=$1.57 | |||
