HSBC (LSE:HSBA) PLC’s profits more than doubled in its latest half-year as the Asia-focused bank took a more upbeat view on bad debts as the global economy comes out of Covid-19.
Interim profits jumped to US$10.8bn from US$4.3bn for the period to end June 2021, which reflected an impairment credit of US$0.7bn against a charge of US$6.9bn a year ago.
Revenues fell to US$25.5bn from US$26.75bn, while the net interest margin weakened by 22 basis points to 1.21%, both of which HSBC said were due to the impact of lower interest rates globally.
The bank nonetheless said it was profitable in every region during the half-year, with Asia generally strong and the UK business posting a profit of US$2.1bn.
Lending is also starting to pick up, said the bank, with mid-single-digit growth expected for the full year, after a 4% rise in the first half.
Going forward, HSBC also expects bad debts to improve further and be "materially lower" than its expected medium-term range.
Dividends are also set to improve reflecting the improved economic outlook and operating environment.
“We now expect to move to within our target dividend payout ratio range of 40% to 55% of reported earnings per ordinary share in 2021," said the statement.
Interim earnings per share were 36c and the interim dividend restated at 7c following the lifting of Covid restrictions imposed last year by the Bank of England.
Noel Quinn, chief executive, has been cost-cutting and switching the bank’s focus towards Asia and confirmed that the bank‘s restructuring programme remains on track with 35,000 jobs to go as part of a plan to cut US$4.5bn of costs by 2022.
Quinn added HSBC would also switch to a hybrid working model wherever possible, with plans in hand to reduce global office space by more than 3.6mln sq ft or 20% by the end of 2021.
Three of the bank’s global business CEOs would relocate to Asia, he reiterated.