Company Of The Week
Sunday 09 August 1998
HSBC, parent of Hongkong and Shanghai Banking, Hong Kong's largest bank, said first-half profit fell to $2.40bn (pounds 1.46bn). Plunging currencies and weakened financial systems in several Asian economies have pushed them into recession. That's made it harder for companies to pay their debts, forcing many into bankruptcy and prompting HSBC and other banks to set aside funds for possible defaulted loans.
"They're so large in Asia that they can't avoid what's going on out there," said Mark Thomas, an analyst with Credit Lyonnais Securities.
HSBC said it took a charge against earnings for bad and doubtful debts of $1.146bn, more than four times the $257m charge in the first half of 1997.
Chief executive Keith Whitson said the higher provisions were mainly because of declining credit quality in Thailand and Indonesia, which accounted for 58 per cent of the bank's bad and doubtful loans. He said the bank is now provisioned for 90 per cent of its non-performing loans in all markets. HSBC shares fell nearly 10 per cent to 1,379p.
The loan provisions overshadowed positive results in most areas. Non- interest income, for example, rose 5.8 per cent to $4.3bn and the cost- to-income ratio fell 0.2 percentage point to 52.4 per cent. "Their management team is excellent and they're outperforming other Asian banks," said Mr Thomas.
Analysts were surprised at the size of the overall provision for Asian loans. "It's a much greater provision for bad debt," said James Dewhurst, an equities salesman at Charterhouse Tilney. "We were expecting something like $350m."
- 1 Nigel Farage: Me vs Russell Brand on Question Time – he's got the chest hair but where are his ideas?
- 2 Harry Potter fans can apply to the Hogwarts-inspired College of Wizardry
- 3 Jessica Chambers: 19-year-old woman 'doused with lighter fluid and burned alive' in the US
- 4 Russell Brand calls Nigel Farage 'poundshop Enoch Powell' in BBC Question Time debate
- 5 Orange Wednesdays are no more
Weather bomb in pictures: Storms cuts power for tens of thousands – and snow is on the way
Jessica Chambers: 19-year-old woman 'doused with lighter fluid and burned alive' in the US
Russell Brand calls Nigel Farage 'poundshop Enoch Powell' in BBC Question Time debate
Russell Brand was rendered speechless on Question Time by this man
Fury at Airbus after it hints the super-jumbo may be mothballed
Nigel Farage: Me vs Russell Brand on Question Time – he's got the chest hair but where are his ideas?
Shock poll shows voters believe Ukip is to the left of the Tories
Disgruntled RBS worker writes hilarious open letter to Russell Brand after anti-capitalist publicity stunt leaves him hungry
New era of cheap oil 'will destroy green revolution'
Ukip founder Alan Sked and Nigel Farage 'begged Enoch Powell to stand as a candidate'
Ukip candidate jokes about 'shooting peasants' in racist and homophobic rant
iJobs Money & Business
£32000 - £35000 per annum + benefits: Ashdown Group: Marketing Services Manage...
£Neg. (DOE) + Excellent Benefits: Guru Careers: A Finance Account Manager with...
£40000 - £470000 per annum + bonus: Ashdown Group: Java Developer / J2EE Devel...
£45000 - £55000 per annum + Benefits: Ashdown Group: An exciting opportunity h...