HSBC shares fall despite profits growth

Banking giant HSBC said first-half profits grew 10% on a year earlier, to $14.1bn (£9.2 bn) on lower bad debts and shrinking costs

Banking giant HSBC said first-half profits grew 10% on a year earlier, to $14.1bn (£9.2 bn) on lower bad debts and shrinking costs.

But shares in the bank fell more than 2% as the earnings haul disappointed City hopes for pre-tax profits of around $14.5bn (£9.5bn).

Revenues fell 7% to $34.4bn (£22.4bn) amid shrinking income in North America and Latin America

The banking group makes an estimated 90% of its money outside Britain and has benefited from its exposure to emerging markets in Asia.

The lender, the last of the major UK high street banks to report on first-half trading, swung back into the black in the UK with first-half profits of $2.2 bn (£1.4bn).

But HSBC set aside another $367m (£239m) to compensate customers mis-sold payment protection insurance. That takes HSBC’s total bill for the mis-selling scandal – where customers were sold loan insurance they did not need or could not claim on – to £1.8bn.

The bank reported pre-tax losses of $1.6 billion (£1.1bn) in the UK a year earlier, weighed down by the cost of mis-selling claims and a money-laundering scandal in the US.

Its UK retail banking arm returned to the black with profits of $804m (£524m), and the bank said it lent £7.1bn of new mortgages to 68,000 homebuyers during the first six months of the year.

Profits in its UK business banking arm swelled more than 70% to $894m (£582m) year-on-year.

Chief executive Stuart Gulliver shrugged off ‘muted’ global growth – including output slowing to 7.5% in China in the second quarter.

He said the bank is well-placed to benefit from long-term trends in the global economy.

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