Latest news with #BoCom
Yahoo
31-07-2025
- Business
- Yahoo
HSBC sounds alarm over a Reeves bank tax raid
The boss of HSBC has warned Rachel Reeves that a punishing new tax raid would deliver a hammer blow to the UK economy. Georges Elhedery, the bank's cost-cutting chief executive, said piling extra taxes on the bank risked 'eroding' its investment in Britain, which includes lending £220bn in mortgages and business loans every year as well as employing 18,500 staff. 'Banks in the UK are probably subject to the highest level of taxation among all major jurisdictions,' he said. 'The additional taxation on banks does run the risk of eroding our continued investment capacity in the business and in supporting our customers, and ultimately in delivering growth for the UK.' The Lebanese banker, who took over as HSBC's chief last September, said banks already faced an array of levies, including the banking surcharge and bank levy. According to research by PwC, taxes on UK banks are higher than anywhere else in Europe or the US at 45.8pc, compared to 28.8pc in Dublin and 27.9pc in New York. HSBC is currently the UK's largest bank by profits, making it one of the country's biggest corporate taxpayers. Its UK arm forked out £500m in corporation tax last year. Mr Elhedery's comments come amid speculation that Ms Reeves could impose new levies on lenders in her autumn Budget as she pushes to fill a black hole in Britain's public finances. The Chancellor is also mounting pressure to raise more tax revenue after the Office for Budget Responsibility this month warned the UK's public spending plans are 'unsustainable'. In response to speculation around a possible raid, the bosses of Barclays and Lloyds have both separately warned Ms Reeves against raising taxes on banks. HSBC is Britain's largest bank but makes most of its money in Hong Kong and China – leaving it facing a difficult balancing act, placating Western politicians and Beijing. Mr Elhedery spoke on Wednesday after HSBC reported a 30pc drop in its profits because of a $2.1bn (£1.6bn) hit from Chinese lender Bank of Communications (BoCom), in which it owns a 16pc stake. The write-down was linked to a major recapitalisation of the bank by the Chinese government in June amid a move by Beijing to prop up the faltering economy. It follows a $3bn impairment HSBC took on the BoCom last February. The HSBC boss added that an 'oversupply' of offices in Hong Kong had led to defaults on commercial real estate loans. The defaults saw HSBC report a 57pc increase in the sums it expects to lose on bad loans, to $1.1bn. The bank has previously been accused of closing the accounts of pro-democracy dissidents in Hong Kong, a claim HSBC has rebutted by saying it must follow local laws. On Wednesday, shares in the group fell 5.1pc to 921p, the most since April 7, with analysts at Citi saying gloomy investors were sceptical about HSBC because of global trade wars and trouble in China. 'The common pushback we receive is 'why do I need to own this stock?' based on various risk factors (like tariffs),' they said. Donald Trump's trade policies are a key danger for the bank, with tariffs set to hit global activity. Mr Elhedery attempted to shrug off the threat, saying they would have a 'relatively modest impact' on revenues. HSBC's costs also increased 10pc to $8.9bn as the bank invested in artificial intelligence technologies and pushed ahead with a wide-ranging overhaul that will see it split into two separate Eastern and Western divisions. Mr Elhedery is tasked with leading the overhaul of the 160-year old bank that comes as HSBC faces mounting pressure from its largest shareholder Ping An, to spin off its Asian business completely. Speaking on the revamp, Mr Elhedery said: 'We're making positive progress in becoming a simple, more agile, focused organisation built on our core strengths.' Broaden your horizons with award-winning British journalism. Try The Telegraph free for 1 month with unlimited access to our award-winning website, exclusive app, money-saving offers and more. Error in retrieving data Sign in to access your portfolio Error in retrieving data Error in retrieving data Error in retrieving data Error in retrieving data
South China Morning Post
30-07-2025
- Business
- South China Morning Post
HSBC plans US$3 billion stock buy-back after 29% drop in second-quarter profit
HSBC, the largest banking group in Europe and Hong Kong by assets, maintained the size of its stock buy-back programme after reporting a 29 per cent drop in profit last quarter because of bigger-than-expected impairments to its interest in mainland Chinese lender Bank of Communications (BoCom). The UK lender, whose Asian base is in Hong Kong, will set aside US$3 billion to repurchase its own shares for the next three months, matching the spending in the same period a year ago, according to its stock exchange filing on Wednesday. It will pay a dividend of 10 US cents per share, the same as in the preceding quarter. HSBC on July 25 completed its US$3 billion stock buy-back started from May. It spent US$2 billion on stock buy-backs from February to April this year. HSBC said its pre-tax profit in the second quarter fell 29 per cent to US$6.33 billion from a year earlier, citing slimmer lending margins. It also booked a one-off loss of US$2.1 billion after a special stock issuance by BoCom to the Chinese central government in April diluted its stake in China's fifth largest lender to 16 per cent from 19.03 per cent - larger than the US$1.2 billion to US$1.6 billion range it estimated in April. The second quarter pre-tax profit was lower than a market consensus of US$6.99 billion among analysts tracking the stock, according to Bloomberg data. CEO Georges Elhedery (left) arrives at 10 Downing Street on July 9, 2025 to attend a meeting of French and British business leaders. Photo: AFP On a six-month basis, HSBC reported a 26 per cent drop in pre-tax profit to US$15.8 billion from a year earlier. Net profit decreased 30 per cent to US$11.5 billion, or 65 US cent per share, trailing a consensus forecast of US$11.9 billion compiled by the bank.
Yahoo
29-04-2025
- Business
- Yahoo
HSBC Braces for $1.6 Billion Hit in China Shakeup -- But Investors Are Getting a $3 Billion Surprise
HSBC Holdings (NYSE:HSBC) is staring down a potential pretax loss of up to $1.6 billion after China's Finance Ministry announced a $69 billion recapitalization for four major state-owned banks, including Bank of Communications (BoCom). Following the capital injection, HSBC's stake in BoCom is expected to dilute from 19% to 16%, though CFO Pam Kaur emphasized it won't touch the bank's capital ratios. Despite the near-term accounting hit, management stressed that the move strengthens BoCom's CET1 ratio, positioning it to compete harder in a market still battling real estate woes and escalating US-China tensions. Warning! GuruFocus has detected 2 Warning Sign with HSBC. China's property sector slump and rising trade pressures continue to drag on the broader financial system, prompting Beijing to shore up its banking giants. BoCom posted a slim 0.9% profit growth last year, mainly driven by reduced credit impairment charges, even as net interest margins stayed under pressure. HSBC's CEO Georges Elhedery voiced support for the recapitalization, calling it a strategic positive that bolsters BoCom's ability to grow a critical move as asset quality risks across the Chinese banking sector remain stubbornly high. Meanwhile, HSBC dropped stronger-than-expected Q1 numbers and rolled out a fresh $3 billion share buyback, aiming to steady investor nerves in a shaky market. Management also flagged that even under a scenario of sharply higher global tariffs, the direct hit to revenue would likely stay in the low single digits, with about $500 million in potential credit losses. Last year, HSBC already absorbed a $3 billion impairment tied to its original $1.75 billion investment in BoCom, underscoring the complex but enduring ties between Europe's biggest trade bank and China's evolving financial battlefield. This article first appeared on GuruFocus.
Arabian Post
29-04-2025
- Business
- Arabian Post
HSBC Endures $1.6 Billion Hit Amid BoCom Stake Reduction
HSBC Holdings Plc has disclosed an anticipated pre-tax loss of up to $1.6 billion following the dilution of its stake in China's Bank of Communications . This development arises from BoCom's private share placement, part of a broader initiative by Chinese state-owned banks to bolster their capital reserves. The dilution reduces HSBC's holding in BoCom from 19.03% to approximately 16%, a consequence of the Chinese government's strategy to strengthen its banking sector. The $71.5 billion recapitalization effort aims to enhance the capacity of major state-owned banks, including BoCom, to support the national economy. Despite the substantial charge, HSBC has indicated that the loss will not significantly impact its capital ratios or dividend distributions. The bank emphasized that the investment in BoCom is long-term, and the charge is a non-cash accounting adjustment due to the dilution. This is not the first time HSBC has faced financial repercussions related to its BoCom investment. In the previous year, the bank reported a $3 billion impairment on its stake, citing challenges in China's financial sector, particularly the ongoing property market crisis. The latest charge coincides with HSBC's announcement of a 25% decline in first-quarter pre-tax profits, amounting to $9.5 billion. This downturn is attributed to one-time losses from business disposals in Canada and Argentina. Nevertheless, the results surpassed analyst expectations, which had projected profits of $7.8 billion. In response to the profit decline, HSBC has initiated a $3 billion share buyback and declared a first-quarter dividend of $0.10 per share. The bank's CEO, Georges Elhedery, who assumed the role in September, is spearheading a cost-cutting initiative targeting $1.5 billion in annual savings by 2026. This strategy includes restructuring business segments and divesting operations in Germany, South Africa, France, and Malta. See also Aramco and BYD Join Forces on Energy Vehicle Innovation HSBC has also raised its bad loan provisions by $202 million to $876 million in the first quarter, reflecting economic uncertainty and the impact of higher tariffs. Of this amount, $100 million is allocated for exposure to Hong Kong's commercial property sector. The bank anticipates lending demand to remain subdued throughout the year and projects a potential $500 million increase in loan loss provisions if global economic conditions deteriorate further.
Reuters
21-03-2025
- Business
- Reuters
China's Bank of Communications 2024 profit flat, warns of margin pressure
People visit the Bank of Communications' booth at the 2021 China International Fair for Trade in Services (CIFTIS) in Beijing, China September 3, 2021. REUTERS/Florence Lo/File Photo Purchase Licensing Rights, opens new tab Summary Companies BoCom's annual profit flat BoCom VP warns of margin pressure, bad loan risks NPL ratio end-Dec flat from end-Sept BEIJING/SHANGHAI, March 21 (Reuters) - China's Bank of Communications Co Ltd (BoCom) ( opens new tab, reported a 0.9% rise in 2024 net profit, while warning of margin pressure and bad debt. Profit was 93.586 billion yuan ($12.91 billion) last year，according to a filing on Friday. Get a look at the day ahead in U.S. and global markets with the Morning Bid U.S. newsletter. Sign up here. "Net interest margins will continue to face pressure in the short term," BoCom vice president Zhou Wanfu told a press conference following the publication of the annual results. "On the asset side, factors like LPR (benchmark lending rate) cuts, adjustments to existing mortgage rates and other policy factors, combined with weak effective credit demand, have intensified industry competition," Zhou added. His remarks come as Chinese banks have grappled with weak loan demand amid a slowing economy and a protracted property crisis, which policymakers have responded to by lowering borrowing costs. BoCom is the first of the nation's five major state-owned banks to report annual results for 2024. Also of concern for the bank is the real estate business, which will continue to drag. Vice president Gu Bin said that there will be increasing bad debt among loans to property developers, while risks on retail loans have also risen. "In 2025, the external environment will be more complicated, challenging and uncertain," the bank said in the filing. The bank's net interest margin (NIM) - a key gauge of profitability - was 1.27% at the end of last year, slightly narrowed from 1.28% at the end of September. Its non-performing loan (NPL) ratio was 1.31% at the end of last year compared to 1.32% at end of September. ($1 = 7.2497 Chinese yuan renminbi) Reporting by Ziyi Tang and Engen Tham; Editing by Muralikumar Anantharaman and Kim Coghill Our Standards: The Thomson Reuters Trust Principles., opens new tab
