HSBC’s pre-tax profit more than doubles in fiscal H1

HSBC Holdings plc (LON: HSBA) said on Monday its pretax profit in the first half climbed by more than 100% on a year over year basis. Its financial performance saw a $700 million boost from credit reserve releases. Shares of the financial services firm were up about 1% on Monday morning.

HSBC resumed dividend payments

On the back of hawkish H1 performance, HSBC also resumed dividend payments and expressed plans of reinstating share repurchase as well. The confidence at large was attributed to the economic recovery after an unprecedented hit from the COVID-19 crisis last year.

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HSBC reported $10.8 billion of pre-tax profit in the first half versus the year-ago figure of $4.32 billion and $9.45 billion expected. Its revenue, however, still noted a 4% annualised decline, hinting at longer-term challenges. In the prior quarter (Q1), its revenue had jumped more than 100%.

According to the British multinational, both of its primary markets, Britain and Hong Kong, saw significant improvement but low-interest rates in Asia weighed on its revenue. Its investment bank also failed to match the hawkish performance in H1 of the previous year.

HSBC is in search of acquisitions

Outside of China, HSBC is now in search of acquisitions to further expand its footprint in wealth management. CEO Noel Quinn said the “bank was looking at three or four as we speak in insurance and asset management niche”.

HSBC has a different strategy than its rivals as it is not participating in SPAC listings that have been on the rise recently and benefitted its competitors.

“It has been a very conscious decision to stay away from SPACs because that sector runs an elevated risk of litigation,” said CFO Ewen Stevenson.

On CNBC’s “Squawk Box Asia”, Frederic Neumann of HSBC said COVID-19 restrictions help cushion the impact but, in Asia, will be a hurdle for growth in Q3.