HSBC is expected to report a significant decline in pre-tax profit for the second quarter from the same period last year.
Eleven analysts, on average, estimated the bank's pre-tax profit would fall 26.7 per cent to US$6.16 billion, a Bloomberg survey found. The banking giant will post its interim results today after the market closes.
Market participants said they were looking for indications of asset quality health in emerging markets - which showed signs of deterioration at rival Standard Chartered - and progress in cost cutting and revenue generation.
A marked turnaround in its businesses in Europe and North America helped HSBC to post significantly higher results in the first quarter.
Dominic Chan, an analyst at BNP Paribas, said he expected HSBC's business in Europe and North America to perform better in the second quarter than in the same period last year.
The US$700 million provision for money-laundering fines in the US and provisions for mis-selling of wealth management products in Britain and restructuring costs in last year's second quarter would not be repeated this year, Chan said.
He said he expected the bank's Hong Kong business to deliver a percentage growth rate for underlying pre-tax profit in the double digits.
Analysts expect the bank's business in Europe to show a significant improvement in efficiency after it slashed more than 1,000 jobs in Britain.
HSBC's "Asia business is likely to remain robust", Goldman Sachs said. In comparison with local banks and Standard Chartered, which will post its results tomorrow, HSBC's asset quality should be more resilient, even as China's macroeconomic environment deteriorated, Goldman said, because HSBC had a prudent risk management policy and a more diversified geographical mix.
However, Morgan Stanley said provisions in the region may have edged up in the quarter.
Citic Securities International's analyst Steven Chan said he was concerned if the investments HSBC made would affect the capital adequacy of the bank.
Six analysts surveyed by Bloomberg expected first-half net profit at HSBC's wholly-owned subsidiary Hang Seng Bank, which also reports today, to soar an average of 56.1 per cent to HK$14.52 billion,
The rise would largely be due to a dilution gain, HK$9.5 billion, from an accounting change treating Industrial Bank as a financial investment rather than an associate, with effect from this year. Stripping out the one-off gain, Deutsche Bank said it expected a rise of 19 per cent year on year.