HSBC,Changing With the World

HSBC,Europe's largest bank,has reported first half pretax profits of 13.6 billion dollars on a strong Hong Kong performance,up from 12.3 billion a year ago.The bank was helped by its brokerage customers using the Stock Connect link to the Shanghai stock exchange earlier in the year,when Chinese shares were still hot.Indeed,HSBC may move its headquarters from London to Hong Kong,pending completion of a review of the matter by year's end.
By contrast,its businesses slowed in Europe,the US and other emerging markets apart from Hong Kong.HSBC is selling its underperforming Brazilian operations to Banco Bradesco SA for 5.2 billion.It is also considering selling its lagging Turkish business to the Netherlands' ING Group.
HSBC set aside 1.3 billion to cover legal costs stemming from regulatory investigations into the rigging of foreign exchange markets by banks worldwide.On the plus side,its investment bank saw a 21% rise in FX trading revenue.The British retail bank also did well.You should work on the assumption that it is a bank we would like to keep,said chief executive Stuart Thomson Gulliver,because it's got excellent returns from what we see going forward and the UK is a profitable banking market.*
HSBC is in the process of moving its UK retail operations headquarters to Birmingham within three years.This British bank will be renamed and have a staff of 22,000.*
We don't see anything alarming coming from what has happened recently in China,Mr.Gulliver added,but there will be some muted impact on our business both from the sell-off in the stock market and from the more reduced economic activity we have seen.Now it's less than two months since our investor update where we unveiled our actions to capture the value of our international network in the changed world.Executing these actions is our number one priority.Work is proceeding in all of these areas,in particular those aimed at reducing risk-weighted assets,cutting cost,and turning around or disposing of underperforming parts of the business.
In order to maintain broad-based growth and a diversified profile,we expect around half of incremental risk-weighted assets to be redeployed to Asia,with the rest spread across Europe,the Middle East,and North America including Mexico,Mr.Gulliver noted in a conference call following the earnings release.*
HSBC wants to boost its growth in Asia by expanding its insurance business in the Pearl River Delta region of China,and seeks to return its global banking and markets division to profitability.Overall,it wants to save 4.5-5 billion dollars annually by the end of 2017,shedding 8,000 jobs in the UK and 25,000 worldwide,although it has added 2,200 compliance staff.
HSBC has increased shareholder value by initiating a five billion dollar buyback and raising its dividend by 124% to 0.28 a share.*
HSBC Holdings PLC ADR (HBC)