Bad debts, good signs in UK
(11 August 2009 – UK) The half year results of two of the UK’s big banks has shown that while bad debts are still having an affect on profit, positive signs on revenue growth are emerging.
For HSBC, one of Britain’s two biggest banks, impairments and provisions were US$13.9 billion (A$16.6 billion) in the first half of 2009, a 39 percent increase from US$10.0 billion in the first half of 2008.
While the profit result of US$5.0 billion for HSBC was a 51 percent fall on the same time last year, the result is a vast improvement on the corresponding results in the six months to the end of 2008, where HSBC recorded a US$940 million loss.
The second of the UK’s biggest banks, Barclays, also recorded a sharp rise in impairments, which soared 86 percent to £4.6 billion (A$9.1 billion).
Despite this, the bank managed to remain profitable on the back of positive investment banking results. Total income for Barclays before impairments was up more than £5.0 billion compared with six months ago, to £16.7 billion.
The results from Barclays and HSBC have continued the trend shown by the big banks in America, like JP Morgan, where investment banking revenues have helped the banks bounce back
However, bad debts in UK retail banking are still on the up as the UK’s recession continues to hit hard.
Barclay’s chief executive, John Varley, said that is was important that banks get back into profit because they have an obligation to contribute to the regeneration and stabilisation of economies.
While the profit result of US$5.0 billion for HSBC was a 51 percent fall on the same time last year, the result is a vast improvement on the corresponding results in the six months to the end of 2008, where HSBC recorded a US$940 million loss.
The second of the UK’s biggest banks, Barclays, also recorded a sharp rise in impairments, which soared 86 percent to £4.6 billion (A$9.1 billion).
Despite this, the bank managed to remain profitable on the back of positive investment banking results. Total income for Barclays before impairments was up more than £5.0 billion compared with six months ago, to £16.7 billion.
The results from Barclays and HSBC have continued the trend shown by the big banks in America, like JP Morgan, where investment banking revenues have helped the banks bounce back
However, bad debts in UK retail banking are still on the up as the UK’s recession continues to hit hard.
Barclay’s chief executive, John Varley, said that is was important that banks get back into profit because they have an obligation to contribute to the regeneration and stabilisation of economies.
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