HSBC’s 2009 interim results, the other set of today’s big banking earnings, are now out.
The highlights below:
HSBC HOLDINGS REPORTS PRE-TAX PROFIT OF US$5,019 MILLION
HSBC made a profit before tax of US$5,019 million, a decrease of US$5,228 million, or 51 per cent, compared with the first half of 2008.
Net interest income of US$20,538 million was US$640 million, or 3 per cent, lower than the first half of 2008.
Net operating income before loan impairment charges and other credit risk provisions of US$34,741 million was US$4,734 million, or 12 per cent, lower than the first half of 2008.
Total operating expenses of US$16,658 million decreased by US$3,482 million, or 17 per cent, compared with the first half of 2008. On an underlying basis, and expressed in terms of constant currency, operating expenses decreased by 6 per cent.
HSBC’s cost efficiency ratio was 47.9 per cent compared with 51.0 per cent in the first half of 2008.
Loan impairment charges and other credit risk provisions were US$13,931 million in the first half of 2009, US$3,873 million higher than the first half of 2008.
The tier 1 and total capital ratios for the Group remained strong at 10.1 per cent and 13.4 per cent, respectively, at 30 June 2009.
The Group’s total assets at 30 June 2009 were US$2,422 billion, a decrease of US$105 billion, or 4 per cent, since 31 December 2008.
However, almost all of HSBC’s performance numbers exclude the impact of fair value on its own debt — which resulted in a financial hit as the bank’s credit spreads tightened. That fair value option on own debt is something of a big deal in the case of HSBC. The bank has historically generated the greatest revenue per unit of debt fair valued among its European peers, so when credit spreads start going the other way, it tends to take a bigger hit.
Related links:
European own credit, a banking preview – FT Alphaville
Own credit conundrum at the IASB – FT Alphaville
Profiting from your own crummy creditworthiness, redux – FT Alphaville