10 August 2005

The Web

HSBC Holdings reports pre-tax half year profit of USD10,640m

HSBC Holdings plc made a profit before tax of US$10,640 million for the first six months of 2005, a rise of US$520 million, or 5 per cent, over the same period in 2004.
Net interest income of US$16,690 million was US$1,560 million, or 10 per cent, higher than for the same period in 2004. On an underlying basis and at constant currency, net interest income increased by 6 per cent. Net operating income of US$24,822 million was US$2,218 million, or 10 per cent, higher than for the same period in 2004. Operating expenses of US$14,490 million rose US$1,888 million, or 15 per cent compared with the same period in 2004. On an underlying basis and expressed in terms of constant currency, operating expenses increased by 11 per cent.
HSBC’s cost:income ratio was 48.5 per cent compared with 46.2 per cent in the same period in 2004. Loan impairment charges and other credit risk provisions were US$3,277 million in the first half of 2005, US$537 million higher than in the same period in 2004. The Group’s total assets at 30 June 2005 were US$1,467 billion, an increase of US$187 billion, or 15 per cent, since 31 December 2004.
Sir John Bond, HSBC Group Chairman said “The first half of 2005 was one of continued progress for HSBC. In aggregate, we grew net operating income by US$2.2 billion or 10 per cent compared with the first half of 2004. We achieved profit attributable to shareholders of US$7.6 billion, an increase of 9 per cent. Earnings per share of US$0.69 was 8 per cent higher than in the first half of 2004. In line with our schedule of paying quarterly dividends, the Directors have approved a second interim dividend of US$0.14 per share, which will be payable on 5 October 2005. Total dividends declared to date in respect of 2005 amount to US$0.28 per share and are US$0.02, or 8 per cent, higher than in the prior period.
In many of our major markets, the rate of economic growth was slightly lower than in the first half of 2004. To a large extent our results are a measure of our success in expanding our personal financial services and commercial banking businesses in new and emerging markets. The results also reflect robust profit growth in our European Commercial banking business from productivity improvements and stronger performance in our US consumer finance business as our reshaping of that portfolio has contributed to lower credit costs. In addition, the value of our deposit base in the Hong Kong SAR improved as Hong Kong dollar interest rates rose to track US rates once again.
Much of 2004 was devoted to the integration of acquisitions in the US and Mexico. Having completed those tasks successfully, we have again concentrated on organic growth during the first six months of this year.
The range of opportunities available to us to expand is more balanced geographically than ever before. We are, therefore, concentrating our capital and other resources on key strategic priorities and divesting ourselves of certain businesses where the returns are less attractive.
At the same time, we will maintain the strong financial position that has served HSBC well throughout its history and which, going forward, will allow us to both grow our business and pursue a progressive dividend policy.”
HSBC is one of the largest banking and financial services organisations in the world with an international network comprising over 9,800 offices in 77 countries and territories in Europe, the Asia-Pacific region, the Americas, the Middle East and Africa.

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