Newspaper article International Herald Tribune

HSBC Profit Rises 27%, Propelled by Asia Lending ; despite Gains, Bank Aims to Shed 30,000 Positions and Cut Back in Europe

Newspaper article International Herald Tribune

HSBC Profit Rises 27%, Propelled by Asia Lending ; despite Gains, Bank Aims to Shed 30,000 Positions and Cut Back in Europe

Article excerpt

The company's net income rose to $16.8 billion last year from $13.2 billion in 2010 on higher revenue at its commercial banking unit, even as slower growth in Europe was a drag on the company.

HSBC, one of the biggest banks in Europe, said Monday that its profit rose 27 percent last year in part because of greater demand for loans in the developing world.

The bank was able to cushion slower growth in Britain, where it is based, and in the rest of Europe with growth in Asia, where it now generates more than half of its earnings.

Stuart Gulliver, the chief executive, said that more needed to be done to reduce the costs but that the bank had had a "good start to the year."

Net income rose to $16.8 billion last year from $13.2 billion in 2010 on higher revenue at its commercial banking unit. Pretax profit in Asia excluding Hong Kong grew the most, while the bank also posted a $3.9 billion accounting gain on the value of its own debt.

"Their outlook statement was quite upbeat, and there were no bad surprises," said Jane Coffey, a fund manager at Royal London Asset Management. "They are definitely the quality play in the sector."

HSBC said the outlook for 2012 remained positive even after costs rose 10 percent last year, largely because of rising salary demands in the faster-growing markets of the Asia-Pacific region and Latin America, where HSBC had said it would invest in hiring.

Mr. Gulliver said, "We expect continued strong growth in the dynamic markets of Asia, Latin America and the Middle East, although at a more moderate pace than in 2011, and that mainland China will achieve a soft landing."

Competition for talent, especially in China, India and Brazil, was tough, he said, adding that he expected wage increases to hurt the bank's cost base again this year before slowing down in 2013.

"There's a limited pool of talent," he said, adding that banks competed for commercial and retail staff members, not just investment bankers. …

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