Reports

Pre-Tax Profits Drop At HSBC's Private Bank; One-Off Factors Exaggerate Decline

Tom Burroughes, Group Editor, August 5, 2013

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The global private banking arm of HSBC, the global firm, reported a pre-tax profit of $108 million in the half-year to 30 June, down from $527 million a year ago, although the drop was lower when one-off factors were taken into account.

The global private banking arm of HSBC, the financial group currently
in the midst of a cost-cutting program, reported a pre-tax profit of $108
million in the half-year to June 30, down from $527 million a year ago,
although the drop was lower when one-off factors were taken into account.

On an underlying basis, excluding the gain on the sale of
HSBC’s operations in Japan,
pre-tax profit at the global private bank was down by $349 million due to the
loss following the reclassification of its Monaco business to “held” for sale,
partly offset by decreased operating businesses. (In mid-July, HSBC Private
Banking Holdings(Suisse), decided keep its private banking business in Monaco
after reviewing unsolicited expressions of interest.)

Revenue fell by 29 per cent, mainly caused by the loss
following reclassification to “held for sale” and the sale of the Japan
operation in the first half of 2012; net interest income fell as
higher-yielding positions matured and opportunities for reinvestment were
limited by lower prevailing yields, HSBC continued.

"The
reduced profit for global private banking reflected the loss on
reclassification of the Monaco business to  'held for sale'. Excluding
the impact of this one-off, revenue was 4.7 per cent lower than in H1
2012," a spokesperson for the private bank told this publication. 

Client assets at 30 June stood at $386 billion, compared
with $398 billion at the end of December last year. The bank logged net outflows of $10
billion in the six months to 30 June.

Net interest income in the six months to June 30 was $575
million from $672 million a year earlier; net fee income fell to $602 million
from $625 million, the bank said in a statement today.  Net operating income was $1.137 billion, down
from $1.637 billion a year earlier,

For the banking group as a whole, it logged a pre-tax
profit, on a reported basis, of $14.1 billion, 10 per cent higher than in the
same six months of 2012. On an underlying basis, pre-tax profit rose 47 per
cent year-on-year, HSBC said. The bank had a core Tier 1 capital ratio of 12.7
per cent at the end of June.

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