Hong Kong banks lose almost 60% profit in first six months

The Hang Seng has lost 12 billion dollars in profits, with rise in bad loans and lower income fees weighing heavily on the balance. HSBC is down by 14 % , also damaged by the loss of value of the pound after Brexit

Hong Kong (AsiaNews/Agencies) – Hang Seng Bank reported a 60 per cent slump in first-half net profit, as rising bad loans and lower income fees weighed on a balance sheet that was helped in the previous year by a one-time gain. The lender, a unit of HSBC, said net income was HK billion for the first six months, down from last year’s HK billion profit.

The biggest risk faced by the bank is a sharp increase in the proportion of bad loans in Hong Kong and mainland China, Morgan Stanley’s equity analyst Anil Agarwal wrote in a research report before results were announced. “A very high interest rate increase would be likely to cause a sharp property price correction in Hong Kong”, he said.

HSBC said its first-half pretax profit fell 14 per cent to US.795 billion after adjustments, hurt by shrinking income fee from equities trading businesses in Hong Kong and a slumping pound after Britain’s vote to leave the European Union. Total revenue fell 10.5 per cent, the bank said in its statement.

Hong Kong-based banks also face problems including low interest rates that crimp margins, and the deterioration in asset quality in mainland China. The fall in the pound following the UK’s vote to leave the European Union in July has also affected HSBC, which is headquartered in the UK.

Globally HSBC operates in 71 countries around the world, though it is taking steps to reduce this footprint. Last year, HSBC chief executive Stuart Gulliver announced a three-year strategy to reduce the bank’s international operations, cut annual costs by US billion, and shed 50,000 jobs.

• hong kong
• banks
• revenue
• hsbc
• hang seng
• brexit
• loans