HSBC share price rises as profit climbs 10 per cent and it confirms Brazil unit sale

 
Jessica Morris
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HSBC is at the beginning of a three-year plan overhaul to its business (Source: Getty)

The UK's biggest bank has unveiled a 10 per cent rise in profits - but it has yet to decide whether it will remain headquartered in the UK. Shares in HSBC were trading up 0.6 per cent to 583p in London today.

The figures

HSBC said profit climbed 10 per cent to $13.6bn (£8.7bn) in the first six months of this year, up from $12.3bn a year ago, and above expectations of $12.5bn. Revenues rose to $32.9bn, up from $31.2bn during the same period a year earlier.

It revealed a minor coup in its bid to sell off under-performing businesses: the sale of its Brazil unit to Banco Bradesco for a higher-than-expected 17.6bn reais (£3.3bn).

However, it also increased the sum set aside to cover costs from various regulatory probes such as the forex rigging scandal to $1.3bn, from $550m.

Read more: HSBC lays down the gauntlet to George Osborne on bank levy as it mulls exit from UK

Why it's interesting

HSBC is at the beginning of a three-year overhaul of its business, which it's hoped will strip out $5bn of costs. This has resulted in job losses, the sale of under-performing business units (ie. that Brazilian unit) and a renewed focus on Asian markets.

It's been rocked by a series of scandals, such as its part in forex rigging, which resulted in huge fines from the Financial Conduct Authority (FCA) back in November, when HSBC, UBS, JPMorgan and Citi were slapped with a record £1.1bn fine by the regulator for "failing to control business practices" in their forex trading operations.

Another sore spot came earlier this year came in the form of allegations HSBC's Swiss private banking arm in Geneva had helped rich and powerful clients avoid paying tax.

The bank also hit headlines after it threatened to up sticks and move its headquarters out of the UK thanks to a combination of the bank levy and uncertainty around ring-fencing rules. The pressure prompted chancellor George Osborne to promise to "gradually reduce" the bank levy over the next six years in his July Budget.

Read more: HSBC leaving the UK? Five charts showing why it might actually mean it this time

What HSBC said

Stuart Gulliver, HSBC's chief executive, said:

Our performance in the first half of 2015 demonstrated the underlying strength of our business. Our diversified, universal model enabled the group to deliver increased profitability in spite of slow global growth. We are executing the actions that we announced at our investor update in June and our focus is on making significant progress during the remainder of the year.

In short

While profits increased by more than expected, HSBC's decision to beef up the sum set aside to cover various regulatory probes suggests large fines are still an issue for the sector.

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