All eyes on HSBC's risk-weighted asset cuts as it reports earnings
The true gauge of HSBC Holdings' progress when it reports second-quarter earnings this afternoon will not be how much the bank grew profits but rather the volume of assets it was able to carve out of its balance sheet.
The true gauge of HSBC Holdings' progress when it reports second-quarter earnings this afternoon will not be how much the bank grew profits but rather the volume of assets it was able to carve out of its balance sheet.
The bank is expected to post quarterly pre-tax profits of about US$5.8 billion, according to a consensus from Bloomberg. That would represent year-on-year growth of 4.5 per cent.
However, unless profits tumble or soar beyond expectations, all eyes will be on the amount of risk-weighted assets HSBC has cut globally.
In June, the bank unleashed a major revamp of its global strategy, the centrepiece of a US$290 billion cutback in risk-weighted assets, or about a quarter of the total, mainly coming off its investment bank's balance sheets. The reduction is part of a plan to save US$4.5 billion to US$5 billion a year by 2017.
The lack of large legal and restructuring charges will help
Sanford C Bernstein senior analyst Chirantan Barua said he considered the reduction of risk-weighted assets as "one of the main pillars of progress at the bank".