HSBC quarterly profit slides 45% because of Brexit uncertainty and China slowdown

HSBC is battling uncertainty in its two key markets over the EU referendum in Britain and the impact of a slowdown in China on Hong Kong

It calls itself the world’s local bank – a pity that HSBC isn’t living up to it when it comes to its upper echelons (Corbis)

Second quarter pre-tax profit at UK and Hong Kong-based HSBC nearly halved year-on-year, after revenue at the bank was hit by slowing economic growth in Britain and Hong Kong.

Quarterly pre-tax profit came in at $3.61bn (£2.7bn), 45 per cent lower than last year’s figure of $6.57bn. First half pre-tax profit also slid 29 per cent, which was far more than analysts expected.

Pre-tax profit in the first half of the year hit $9.7bn, down from $13.6bn in the same period a year earlier, HSBC said. That was below analysts’ estimates of $10bn.

HSBC is battling uncertainty in its two key markets, with the EU referendum result causing market fluctuations in Britain and the impact of a slowdown in China prompting jitters in Hong Kong.

Stuart Gulliver, HSBC chief executive, said that the EU referendum had caused volatility that was expected to last for some time.

“Following the outcome of the referendum there has been a period of volatility and uncertainty which is likely to continue for some time,” he said in statement issued to the Hong Kong stock exchange. “We are actively monitoring our portfolio to quickly identify any areas of stress. However, it is still too early to tell which parts may be impacted and to what extent.”

HSBC announced a plan to buy back up to $2.5bn in shares in the second half of the year.

Most of the major banks have seen their profits slide due to record low interest rates and spiralling regulatory costs that have been weighing on Europe’s banking sector. Lloyds had said last week that Brexit was behind its decision to cut 200 branches and another 3,000 jobs.

However, HSBC said after the referendum that it would not re-open a review into whether to move its headquarters away from the UK.

Douglas Flint, HSBC’s chairman, told City executives gathered at a conference in London just days after the vote that HSBC would stick to its plan to keep its headquarters in the UK.

“We said at the time we made the decision that we’d taken that [Brexit] into consideration and that in the event of this outcome we would not call for that to be revisited,” he said.