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By Ishika Dangayach, 11:40 PM ET
HSBC Holdings PLC's net profit increased in the secondquarter as the bank lowered provisions for bad loans triggered by thecoronavirus pandemic's economic repercussions.
The banking behemoth, which is increasing its focus onlucrative Asian markets and announced that it will begin paying dividends,which is a key focus for many investors in the industry.
At the same time, it maintained a sizable cushion againstcredit losses caused by the pandemic and warned of continued uncertainty.
HSBC posted a pretax profit of $10.8 billion, up from $4.32billion in the same time last year and above the bank's average expectation of$9.45 billion.
“These are good results that reflect the return of growth inour main markets and marked progress in the execution of our strategy,” saidNoel Quinn, Group Chief Executive, in a statement. “We were profitable in everyregion in the first half of the year, supported by the release of expectedcredit loss provisions.”
Revenue decreased 4% to $25.6 billion as a result oflow-interest rates, particularly in Asia, where it produces the majority of itsmoney, and lower MSS revenue in global banking and markets.
Following the Bank of England's removal of payout limitslast month, HSBC intends to pay an interim dividend of seven cents per share.This compares to its pre-pandemic 2019 interim dividend of $0.31 per share.
The company is reducing its activities in the West andincreasing its investments in Hong Kong and mainland China, where the bankearns the majority of its profits. This year, the company decided to divest underperforming retail banking businesses in the United States and France andannounced a plan to invest $6 billion in Asia over the next five years.
While, managing money for affluent individuals, particularlyin Asia, is a significant component of HSBC's strategy change, and the bankboasted an 18 percent year-over-year growth in wealth balances, to $1.67 trillion.
Shares of the company in London listed stock is down by 0.3%
With inputs from WSJ