HSBC said it would pay an interim dividend after its profit before tax grew more than fourfold to $5.1bn in the second quarter.
Europe’s largest lender benefited from an improving global economic outlook as it continued to cancel provisions set aside to cover credit losses during the depths of the coronavirus pandemic that hit performance in 2020.
The second-quarter figures, announced on Monday, easily beat analyst estimates, which had predicted income of about $3.7bn, despite a slight drop in revenue. The bank has also boosted investments, in particular through a $6bn plan to grow its Asia wealth business. Revenues were $12.6bn for the quarter, down from $13.1bn in the same period last year.
“These are good results that reflect the return of growth in our main markets and marked progress in the execution of our strategy,” said HSBC chief executive Noel Quinn. “We were profitable in every region in the first half of the year, supported by the release of expected credit loss provisions.”
HSBC cancelled a further $300m of provisions made for bad debts during the pandemic in the second quarter. It has now cancelled $700m of reserves this year, bringing the total of its increased reserves down to about $2.4bn.
That helped net profits for the first half of 2021 surge to $10.8bn, up about 150 per cent compared with the same period last year.
The performance marked a turnround from a bleak 2020, when banks grappled with ultra-low interest rates, a slowdown in trade and the fallout from unprecedented global lockdowns. Last year, HSBC’s annual profit plunged 45 per cent.
HSBC’s profit attributable to ordinary shareholders was $3.4bn in the second quarter, up from $192m in the same period last year.
The London-based bank announced an interim dividend of 7 cents per share on Monday. The Bank of England removed restrictions on bank dividend payments in July, judging the sector to be resilient enough to withstand any further shocks from Covid-19.
HSBC said it had continued to accelerate its strategic priorities in the second quarter, withdrawing entirely from its struggling US banking operation and selling its French retail bank. The retreat from its slow-growing American and European divisions has formed part of the bank’s efforts to make cost savings of about $4.5bn and cut 35,000 jobs.
The lender also appointed new co-heads of its Asia-Pacific business in June after Peter Wong, who had been chief executive in the region for more than a decade, stepped down in order to take a role as non-executive director. The bank is also in the process of relocating four of its top executives from the UK to Hong Kong as it continues to accelerate a strategic shift to Asia.