HSBC profit falls 29 per cent on China, Britain uncertainty

HONG KONG – HSBC said Wednesday its first-half profit declined 29 per cent from a year earlier due to market volatility fueled by uncertainty about China’s economic outlook and Britain’s relationship with the European Union.

HSBC Holdings PLC said its profit for the six months ending June 30 was $9.7 billion, or 32 cents per share, down from $13.6 billion in the same period of 2015. Revenue fell 10.5 per cent to $29.5 billion.

Most of the revenue decline was due to weaker market activity and “spikes of uncertainty,” chairman Douglas Flint said in a statement.

“Concern over the sustainable level of economic growth in China was the most significant feature of the first quarter and, as this moderated, uncertainty over the upcoming UK referendum on membership of the European Union intensified,” said Flint.

The London-based bank announced a $2.5 billion share buyback in the second half. It said that would return to shareholders half the proceeds from the sale of HSBC’s Brazil unit, which closed July 1.

Two-thirds of HSBC’s profit came from Asia, up from 62 per cent from a year earlier.

Initiatives to cut costs, expand in faster-growing Asian markets and strengthen HSBC’s finances were making progress, said the group chief executive, Stuart Gulliver.

“While the economic environment remains difficult, the action we have taken has already put us in a far better position for when normal conditions return,” said Gulliver in a statement. “HSBC is stronger, leaner and better connected than it was last June.”