Net profit of HSBC Holdings Plc, the largest European banking group, rose in the first half of 2013 by 23 percent after implementing a three-year plan to reduce costs. In January-June 2013, the British bank recorded a profit before tax of $14.1 billion, up from $12.7 billion in the same period in 2012. Analysts were expecting a profit before tax of $14.6 billion.
Revenue fell 7 percent to 34.4 billion, and the bank said that the advancement in developed economies remains slow and growth in China and Asia has slowed down, while the new requirements of the regulatory authorities have added additional costs for HSBC operations.Shares in HSBC Holdings Plc fell yesterday 4.4 percent.
HSBC focuses on asset sales, cost reduction and restructuring measures to deal with the difficulties of the banking industry. In May, HSBC announced that it wants to reduce costs by an additional 2 to 3 billion dollars in 2014-2016, having already started the first phase of restructuring.
HSBC plans to cut its workforce by 30,000 employees before the end of next year, expand in emerging markets and sell assets to meet new capital requirements.
Under the restructuring plan launched in May 2011, HSBC has already achieved cost savings of four billion dollars. Also, HSBC reiterated its objective of achieving a return on equity of 12-15 percent and is on track with the cost-cutting plan.
HSBC is a bank established in Hong Kong and Shanghai in 1865 and traditionally focused on the Asian market. Currently, HSBC has 7,500 branches in over 80 countries and regions. With assets of $2.720 billion, HSBC is one of the largest banking groups in the world.
HSBC announced for the first time the level of damages that it will have to pay the U.S. Federal Housing Finance Agency over allegations that it improperly sold between 2005 and 2008 mortgage bonds to the bailed-out companies: “Based upon the information currently available, it is possible that these damages could be as high as $1.6 billion,” reads the HSBC report on its earnings.
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