HSBC hits pounds 2.3bn record profits

HSBC, one of the world's biggest banking groups, yesterday announced record first half profits, with buoyant revenues boosted by lower operating costs. The group's pre-tax profits grew by 34 per cent to pounds 2.32bn, while operating profit before provisions increased by 25 per cent to pounds 2.24bn.

Midland Bank, HSBC's retail banking arm in the UK, made a significant contribution, with pre-tax profits of pounds 651m, up 24 per cent on the first half of 1995. The interim dividend was raised by 62 per cent ot 15p.

Shares in HSBC jumped 48p to pounds 11.64 on the news. "The results are marvellous," one City analyst said.

Sir William Purvis, HSBC chairman, played down some analysts' expectations that Midland Bank was on the acquisition trail, possibly for a large building society. He said that Asia would continue to be the primary growth area; in the more mature markets of the UK and the Americas, the focus would be on improving productivity and market share.

Sir William voiced concern about the competitive position of Britain's finance sector if the country were not to sign up for the first phase of the single European currency in 1999, following reports that UK banks might be treated differently in terms of market access. He had little doubt "that it's a major concern of the Governor of the Bank of England and I hope he's going to do something about it."

Midland Bank's rise in profits came as the UK bank also succeeded incutting its cost to income ratio to 62 per cent, down from 68 per cent in the same period last year. Keith Whitson, chief executive at the Midland, said"Our sales of mortgages, insurance and other personal investment products rose and the cards division increased its business significantly.

The bank might make up to 300 more staff redundant before the end of the year, but most of those whose jobs were disappearing would be redeployed.