HSBC emerged solidly from the financial crisis, despite reporting a 57 per cent fall in profit for the first six months in 2009 from a year earlier as provisions for bad loans and other credit risks increased.
The bank posted a net profit of US$3.35 billion compared to US$7.7 billion in the first half of 2008.
HSBC chief executive, Mike Geoghegan, stated that: ‘Through the turbulence of the past two years we have had a proven ability to deliver through diversity.’
Unlike a number of other banks HSBC did not rely on government assistance at the height of the financial crisis, but bolstered its balance sheet through a US$18 billion rights issue in March.
In the first half of 2009 the bank performed particularly strongly in investment banking. HSBC’s Global Banking & Markets division more than doubled its profit compared to one year ago to US$6.3 billion.
Profits from investment banking offset the increasing level of bad debt in consumer and commercial lending.
Loan impairment charges and other credit risk provisions increased by 39 percent to US$13.9 billion in the first half.
HSBC’s North American business, where the US personal financial services unit made a loss of $2.9 billion depressed the results. HSBC recently wound down its US consumer finance operation to focus on retail banking, insurance and commercial banking in rapidly-growing emerging markets, such as the Asia-Pacific region.
Customer numbers increased 8 per cent in commercial banking and by 23 per cent to 2.9 million for the HSBC Premier service which targets affluent people.
HSBC Cayman CEO, Gonzalo Jalles commented on the results: ‘People around the globe are concerned about the current state of the economy and how it is affecting the financial sector. These recent results from HSBC Group allow us to continue to confidently promote HSBC’s global strength as a significant reason to bank on island with HSBC Cayman.’
He added, ‘HSBC Cayman’s business model and strategy are directly in line with the Bank’s corporate strategy that has produced solid results.
‘For example, HSBC Group’s strategy when entering new markets is to remain conservative and invest in new opportunities only where and when it makes sense. Our deliberate phased approach to entering and growing in the Cayman market is a reflection of that corporate strategy,’ he said.
‘We have taken the time to carefully evaluate the opportunities on island so that as we continue to expand our products and services, HSBC Cayman can ensure that our offerings are viable, solid, and in line with consumers’ expectations,’ Mr. Jalles concluded.