HSBC Gainsays Prophets Of Doom

by Mary Swire, Tax-News.com, Hong Kong

06 August 2002

Fears of reduced profits at HSBC Holdings caused its shares to close down 0.29% at HK$85 in Hong Kong before its results were announced yesterday, but in the event the global bank announced first half profits down only 7% at US$3.68 billion. Operating profit was in fact up by 6% at US$5.56 billion on increased revenue of US$13.1 billion, and provisions up 62.1% at US$715 million were lower than expected.

The bank's Hong Kong operations, which include the HSBC and Hang Seng Bank, remain the biggest single contributor to group profits before tax at US$1.9 billion, but the charge made by the group to cover defaults on its Hong Kong loan book doubled from HK$595 million to HK$1.28 billion.

David Eldon, chairman of the group's Hong Kong operations, said that credit card charge-off ratios of 9.84% for HSBC, and 9.12% for Hang Seng were below the industry average of more than 11%. He said that the number of staff in Hong Kong had fallen 605 to 24,562, and that the group would make redundancies only as a last resort. "We will look for every means possible to ensure that people remain employed," he said.

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