HSBC profits slump after multi-billion-dollar China charge
The FTSE 100 lender said on Wednesday that its pre-tax profits in the six months to the end of June slid by a heavier-than-expected 26.7 per cent to $15.8 billion.
It was knocked by a $2.1 billion write-down on its stake in the Shanghai-based Bank of Communications as well as $1.9 billion of impairments for expected credit losses.
• Business live: HSBC profits fall more than expected
This loan impairment charge was up $900 million from a year earlier and was pushed higher by the bank's exposure to some troubled areas of the Hong Kong commercial real estate market.
The worse-than-expected profits are a setback for Georges Elhedery, who took charge of HSBC last September and was previously the group's finance chief.
While based in London, HSBC was founded in Hong Kong and the lender has a sprawling business across China and Asia. This has left it exposed to a crunch in the property market in addition to trade tensions between the United States and Beijing that have escalated since Donald Trump returned to the White House in January.
The bank warned on Wednesday that 'broader macroeconomic deterioration' as a result of the tariffs the US is imposing on other countries could knock its return on tangible equity target off course in coming years.
At the same time as dealing with these pressures, Elhedery is also trying to push through an overhaul of the group that involves heavy job losses and aims to achieve $1.5 billion in annual cost savings.
In a fillip to investors, HSBC announced that it would return $3 billion to its shareholders through a share buyback following its half-year results and also declared an interim dividend of 10 cents a share.
Its shares fell 40p, or 4 per cent, to 930p.
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