HSBC profit jumps on lower costs, bad debts

Global banking giant HSBC announced on Monday a 22-percent rise in half-year net profits on lower costs and falling bad-debt charges, while noting that slower Chinese growth was impacting its main market Asia.
Profit after tax jumped to $10.28 billion (7.73 billion euros) in the six months to the end of June compared with the first half of 2012, the British bank and Europe's biggest said in an earnings statement.
The result came in slightly below analysts' consensus forecast of profit after tax totalling $10.52 billion, according to a survey by Dow Jones Newswires, causing the bank's share price to slide in London deals.
"These results confirm the value which is being delivered from the continuing reshaping of the group and from enforcing appropriate cost discipline," chairman Douglas Flint said in the bank's earnings statement.
HSBC added that its pre-tax profit rose 10.0 percent to $14.1 billion in the first half, while total operating expenses decreased 13 percent.
Charges for bad and doubtful loans and other credit risk provisions dropped to $3.1 billion.
"HSBC's performance during the first six months of 2013 reflected the trends we saw in the first quarter," HSBC chief executive Stuart Gulliver said in the earnings statement.
"Economic growth remained muted and regulatory changes continued to impact available returns."
Regarding the outlook, HSBC said that "despite slower growth in the short term, the long-term economic trends remain intact".
But Gulliver sounded a note of caution over China, where the economy is growing at a slower pace.
In China, the world's second-biggest economy, "the new emphasis on the quality rather than the quantity of growth is shifting the policy balance away from stimulus and towards reform", he said.
"We believe this is likely to limit the pace of China's growth to 7.4 percent for 2013 and 2014, which is already being reflected in more modest growth figures in other markets, particularly in Asia."
Headquartered in London, HSBC was founded in Hong Kong and sees Asia as its main market. It has slashed costs by billions of dollars and axed tens of thousands of jobs since 2011 under a massive restructuring of the group.