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HSBC Holdings profits before tax down 28%

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Staff Writer | August 3, 2016
HSBC Holdings profits plunged in the second quarter to push interim result south of market expectations, but the bank announced a $2.5bn (£1.8bn) share buyback thanks to the sale of its Brazilian business.
HSBC Holdings
HSBC Holdings   The sharper than forecast decline
In the six months to June 30, profits before tax of $9.71bn were down 28.7% from the same period last year earlier and short of the City's expectations of around $10bn. Earnings per share were down a third to $0.32.

The sharper than forecast decline was due to second-quarter net profit dropping 40% to $2.61bn, with PBT plummeting 45% to $3.61bn.

Most of the profit decline in the global business came from lower transaction volumes as the 'uncertain times' led to customer restraint, plus a higher $2.4bn of loan impairments.

On the plus side, credit-related income remained solid and management made progress on cutting costs and reducing risk-weighted assets by $48bn.

HSBC, which has paid $0.20 in two dividends for the current year, said it remained committed to sustaining its annual ordinary dividend at current levels "for the foreseeable future".

But due to the uncertain economic and geo-political environment, together with director's expectations for an extended period of low interest rates, the timetable for reaching a target return on equity in excess of 10% by the end of next year has been removed.

Common equity tier 1 (CET1) capital strengthened to 12.1% from 11.9% six months before.