Britain’s largest bank, HSBC, has reported the highest 2011 profit of any Western bank. Pre-tax earnings rose 15% to $21.9bn (£13.84bn). The result was flattered by a rise in the value of the group’s debt: underlying earnings fell 6% to $17.7bn.
What the commentators said
After a string of “disappointing, if not downright dreadful” results from other British banks, “here’s one that is doing exactly what banks are supposed to do”, said James Moore in The Independent: make “pots of money”.
HSBC’s global footprint is crucial, said James Salmon in the Daily Mail. 90% of profits are now earned outside Britain. Revenues shot up in emerging markets such as Asia and Latin America, while the performance in the developed world was lacklustre.
Still, the rapid growth in emerging markets didn’t come cheap. In the Pacific, “pay is now out of control”, said Alex Brummer in the Daily Mail. It has pushed the whole expense structure of the bank to levels where meeting cost targets will be difficult – even if HSBC applies “a chainsaw”. The euro crisis, meanwhile, took its toll on the investment banking division.
The overall picture is one of “stability”. However, in order to become a genuinely “exciting investment”, HSBC is trying to turn itself into a “slicker, sharper firm”, said Nils Pratley in The Guardian.
However, “progress is slow”, with more disposals still ahead and the cost-income ratio on the rise. In global banking terms, HSBC is “about as good as it gets”, said John Foley on Breakingviews. Nevertheless, that still means that it’s “the best of a bad bunch”.
• Read Phil Oakley’s analysis: If you must buy a bank, this is the one to buy.