HSBC remains ‘cautiously optimistic’ on growth as profits rise

Europe’s biggest bank HSBC has announced a 4.6 per cent increase in pre-tax profit for the first half of 2018.

The bank said it was “cautiously optimistic” about global growth, with Asian economies remaining robust, despite growing trade tensions between China and the US.

The results were published as the bank also revealed that it has reached a $765m (£591m) settlement with the US Department of Justice to end an investigation into the sale of mortgage-backed securities in the run-up to the 2008 financial crisis.

The provisional settlement over the way HSBC packaged up toxic bonds between 2005 and 2007 is smaller than some of the settlements the DoJ has reached with other banks, such as the $4.9bn penalty for Royal Bank of Scotland and the $2bn settlement with Barclays.

It also said its contingency plans for Brexit had not changed, despite growing warnings of a no-deal exit and had put in place a “robust contingency plan” for a UK exit from the EU without the existing passporting or regulatory framework.

HSBC said the sum of cash it had set aside in preparation for a no-deal Brexit remained unchanged.

“When negotiation positions become clearer, we will update our contingency plan,” it added.

The bank’s results showed “strong progress” in the issuing of new credit cards in the first half of the year, notably in China, where 221,000 credit cards were issued during that period, just short of the 282,000 issued in the UK.

However, as the bank spent on hiring more frontline staff and expanding digital capabilities, its costs climbed 6 per cent to $17.5bn.

The Hong Kong-listed firm reported pre-tax profit of $10.7bn (£8.3bn) in the first six months of the year, compared with $10.2bn in the same period last year.

In a call with reporters, HSBC group chief executive John Flint said the bank was “pretty sanguine” about China’s growth outlook, despite the protectionist “rhetoric”.

“I think if there is a full blown trade war, of course it could impact our business,” he said. “But equally, while we recognise the potential threat, we haven’t seen any impact in our business so far.”

He added: “As for estimating the impact it’s very difficult… There is a chance it will shave China’s GDP growth by a modest amount, but it’s too early to tell.”