HSBC’s Profits Falling; Cites Lower Business from Asian Region

HSBC is one of the biggest and the largest banks in the world as it operates in more than 70 countries. A 15 percent decline has been recorded in the profit pretax of the Bank, with the figures coming down to $7.89 billion.

On Monday, HSBC Holdings (HSBC.L) reported that its profits reduced by 5 percent during the first six months of the year 2014. This decline resulted due to a reduction in the business that the Bank used to get from the Asian regions.

The Bank saw a decrease in its earnings during the first half of the year 2013. The earnings fell from $10.3 billion to $9.75 billion. Talking about the profit pretax of HSBC, the numbers dropped from $13 billion to $12.6 billion during the first half of the year.

The Bank said that its business was affected by the slow market activity; however, it successfully overcame that shortcoming by increasing its market share with the help of mergers, acquisitions and capital markets. HSBC’s (HSBC.L) chairman, Douglas Flint said that the banking business was on a decline due to an increased scrutiny in the regulatory measures and process.

HSBC is in a middle of conflicts right now. The Bank has to plan a shield for its retail customers against the riskier trading. Moreover, it is facing investigation on the currency market manipulation and the benchmark interests.

News has it that the chairman of the Bank, Douglas Flint, wrote to the Exchequer’s chancellor, George Osborne, to delay the proposal plan, through which the bank was to separate its small business operations and its retail business from riskier investment and trading in order to achieve better economic output, to 2019. Flint, on a press meeting set by conference call, refused to comment on the letter that he wrote to the Exchequer. He further said that the government is contemplating to introduce strict regulations and a number of structural changes in the banking industry, which can prove quite costly for the Banks.

Coming to the revenues of the Bank, HSBC reported total revenues of $31.2 billion for the first half of the recent fiscal year. The profits of the bank- deducting what it pays for the deposits as well as other liabilities from its earnings- declined by 2 percent and fell to $17.4 billion. The operational expenses of HSBC fell down to $18.3 billon whereas poorly performed loans’ charges came to 41 percent.

HSBC’s capital ratio for common equity increased to 11.2% during the first half of the year 2014 from previously held figures of 10.8% at the end of 2013. HSBC (HSBC.L), on the last trade day, August 4, 2014, opened its stocks at a price of $631.30 and closed at a price of $635. As far as the 52 week range of HSBC’s stocks is concerned, the figures are reported to be around $585 and $1,077 respectively. It has a total market capitalization of $122.56 billion, with a price to earnings ratio of 819.35.