HK and Asia-Pacific spur HSBC profits to US$11.1b
Hong Kong and Asia-Pacific led growth in HSBC's global revenues as the region's economic momentum continued to outstrip North America, Europe and Latin America.
Profit before tax in Hong Kong increased 26.9 per cent to US$3.1 billion in the first half compared with the same period last year, while the rest of Asia-Pacific posted a 32.6 per cent gain in earnings to US$3.6 billion.
This outstripped overall growth across the group which climbed 3 per cent to US$11.1 billion before tax. North America and Europe posted 5.3 per cent and 18.7 per cent earnings growth respectively.
Stuart Gulliver, group chief executive, said Hong Kong and Asia-Pacific contributed more than half of the group's profit because of strong trade-related revenue, mortgage incomes, robust demand for wealth management products, and strong performance of loans in both quality and quantity.
Hong Kong's largest profit stream came from retail banking and wealth management, which recorded US$1.6 billion profit before tax, representing more than half of the group's US$3.1 billion profit before tax in the segment.
The second-largest revenue source in Hong Kong was commercial banking, which brought in US$800 million profit before tax. That was followed by global banking and markets trading, contributing US$600 million.
For the rest of Asia-Pacific, the largest revenue earner was global banking and markets trading, which generated US$1.5 billion of pre-tax profit. It was followed by commercial banking, which brought in US$1.1 billion. The region was the largest source of revenue both for global banking and markets trading, and commercial banking.
Gulliver said protecting the bank's leadership positions in Hong Kong would be 'absolutely core' to business in Asia. He believed it unlikely that Hong Kong would see a downward movement in wages, even if the economy cooled thanks to its record-breaking initial public offerings and its status as the world's third-largest financial centre.
Despite the current restructuring of the bank, which had already seen 5,000 jobs axed with a further 25,000 to go by the end of 2013, Gulliver said the bank would continue to grow its headcount in emerging markets.
He also expected a shortage of quality staff in emerging markets as multinational banks expanded their business. 'Actually, the compensation we pay to our staff in Asia is higher than that which we pay to our staff in Europe,' Gulliver said. 'That tells you everything.'
He remained positive about emerging markets, and expected any overheating in Hong Kong to ease. He was also confident that the mainland economy would manage a soft-landing as the government had effectively calmed down the property market and directed the flow of capital investment to different provinces.
Analysts said the group's business in Hong Kong and Asia-Pacific would continue to be supported by robust demand for wealth management and value-added services, such as insurance products.
They also expected the group's savings on costs, including the disposal of its credit card and insurance businesses in US and Europe, to release capital for investment and business development in the region.
The share price of HSBC edged up 0.52 per cent, or 40 HK cents, to close at HK$76.95 yesterday.