Latest news with #GeorgesElhedery
South Wales Guardian
2 hours ago
- Business
- South Wales Guardian
HSBC profits slide 26% as tariff uncertainty puts brakes on investment
The group also revealed that it was about halfway through its efforts to save 1.5 billion US dollars' (£1.1 billion) worth of yearly costs. It reported a pre-tax profit of 15.8 billion US dollars (£11.8 billion) for the first six months of 2025 – about 26% lower than the same period a year ago. The decline was driven by a 2.1 billion US dollar (£1.6 billion) charge to cover losses related to its stake in the Chinese Bank of Communications, as well as costs linked to exiting its businesses in Canada and Argentina. HSBC said the impact of higher tariffs would be 'relatively modest' on its revenues – but that the 'broader macroeconomic deterioration' could mean it misses some financial targets. It also cautioned that demand for lending is expected to remain 'muted' during 2025 amid the more uncertain global trade environment. Georges Elhedery, HSBC's chief executive, explained that some of its customers had 'paused a lot of their investments during this uncertainty – many of them pause, or are in 'wait and see' mode to see where we will land. 'So there are expectations that some of this pause of investments may resume once the uncertainty clears out. 'It will be ambitious to believe things will move on very immediately in H2 (the second half of 2025), but we continue to believe that in the course of the next few years, that growth will resume.' He added that the bank was 'encouraged' by recent trade agreements, with the UK striking deals with the US, the EU, and India. Meanwhile, Mr Elhedery has spearheaded an overhaul of the banking giant's structure, hoping to make it simpler and less costly to run. On Tuesday, HSBC said it had made 700 million US dollars' (£524 million) worth of cost savings – nearly half the 1.5 billion dollars (£1.1 billion) in annual savings it is targeting by 2027. Cost-cutting has seen the bank cut senior jobs across the business, focusing on 'de-duplication' – meaning stripping out roles that are deemed to have very similar responsibilities to others. Mr Elhedery said the savings target includes 'around 8% of our payroll expenses'. He added that the bank was not specifying how many roles it planned to cut, but said the focus on reducing duplication at senior level meant it expects 'headcount reduction to be less than the 8% overall payroll reduction' it was targeting. Mr Elhedery added: 'We're making positive progress in becoming a simple, more agile, focused organisation built on our core strengths. 'We continue to navigate this period of economic uncertainty and market volatility from a position of strength, putting the changing needs of our customers at the heart of everything we do.' HSBC shares fell by more than 4% on Wednesday morning.
Telegraph
3 hours ago
- Business
- Telegraph
Further tax rises will damage Britain, HSBC warns Reeves
The boss of HSBC has warned Rachel Reeves that a punishing new tax raid will 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 £1.5bn 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.'
France 24
5 hours ago
- Business
- France 24
HSBC banks lower profits on higher costs
Profit after tax dropped by one third to $12.4 billion compared with the first six months of 2024, hit by restructuring costs and an impairment on its stake in a Chinese lender. The London-headquartered bank is months into a shakeup aimed at simplifying the group's structure and delivering $1.5 billion in annual cost savings in 2027. It comes as the bank sector faces volatile trading as a result of US President Donald Trump's tariffs onslaught. "We have delivered these results in an ongoing period of uncertainty," chief executive Georges Elhedery said in call with reporters Wednesday. "It has become increasingly important to simplify the organisation and make it more agile," he added. The bank recorded a $2.1 billion impairment linked to its stake in China's Bank of Communications, which was recapitalised by the country's finance ministry this year. HSBC last year reported a $3 billion charge on the value of its stake in the Chinese lender, which was hit by property loan writeoffs. Elhedery said that HSBC is "making positive progress" in its structural overhaul, which began in October, shortly after he became chief executive. Operating expenses increased four percent, which the bank partly attributed to restructuring and related costs. The bank generates most of its revenue in Asia and has spent several years pivoting to the region, vowing to develop its wealth business and target fast-growing markets. HSBC shares fell around 2.5 percent in morning deals on London's top-tier FTSE 100 index despite a dividend payment and plans to repurchase up to $3 billion of shares. Missed expectations Elhedery said HSBC is "well positioned to manage the changes and uncertainties prevalent within the global environment in which we operate, including in relation to tariffs". He noted that a "broader macroeconomic deterioration" could impact returns in future years. Profit before tax fell more than 26 percent to $15.8 billion, falling short of analyst expectations. First-half revenue declined nine percent to $34.1 billion. "Repositioning HSBC is not a simple task given its size and scale," said Russ Mould, investment director at AJ Bell. "There are also challenges in its priority regions such as property market weakness in Hong Kong and mainland China. "It means investors must continue to brace themselves for setbacks in its results well into 2026," he added. In Hong Kong, HSBC shares in were down 3.8 percent at the close. Morningstar senior equity analyst Michael Makdad said the bank "needs to make sure that shareholders in Asia remain on board with the strategic direction... centred on simplification and intensive cost-cutting, but without a radical overhaul of the entire business model". Makdad added that its immediate challenge is to find a replacement for board chairman Mark Tucker, who will retire by the end of 2025 after eight years helping to steer Europe's largest bank.
Times
6 hours ago
- Business
- Times
HSBC profits slump after multi-billion-dollar China charge
Profits at HSBC have tumbled after the Asia-focused bank took a multi-billion-dollar hit on its business in China in the first half of the year. 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.
Free Malaysia Today
6 hours ago
- Business
- Free Malaysia Today
HSBC says pre-tax profit dropped to US$15.8bil in H1 2025
HSBC has announced a second interim dividend of US$0.1 per share and another share buyback of up to US$3 billion. (Reuters pic) HONG KONG : Banking giant HSBC said today that pre-tax profit in the first six months of 2025 fell more than 26% to US$15.8 billion, but said it was 'well positioned' to deal with the effects of US tariffs. 'In the first half, we continued to execute our strategy with discipline and each of our four businesses sustained momentum in their earnings with each growing revenue,' chief executive Georges Elhedery said in a Hong Kong stock exchange filing. The bank announced a second interim dividend of US$0.1 per share and another share buyback of up to US$3 billion. 'In total, we have announced US$9.5 billion in returns to our shareholders through dividends and share buybacks in the first half of 2025 (H1 2025),' Elhedery said. He added that HSBC is 'making positive progress' in its structural shakeup and cost-cutting, which began in October. HSBC said the US$5.7 billion drop in first-half pre-tax profit was 'primarily due to the recognition of dilution and impairment losses of US$2.1 billion' related to China's Bank of Communications. First-half revenue declined 9% to US$34.1 billion. The London-headquartered bank generates most of its revenue in Asia and has spent several years pivoting to the region, vowing to develop its wealth business and target fast-growing markets. Elhedery said HSBC is 'well positioned to manage the changes and uncertainties prevalent within the global environment in which we operate, including in relation to tariffs'. 'While we would expect the direct impact from tariffs to have a relatively modest impact on our revenue, the broader macroeconomic deterioration may see (return on tangible equity) excluding notable items fall outside of our mid-teens targeted range in future years,' he said.
