HSBC Increases First Half 2010 Profits by 121% Compared to 2009
HSBC Mortgage Corp., (HBC) the 21st largest mortgage originator in the United States in 2009, reported its first interim profits Thursday stating that profits increased 121% to $11.1m (pre-tax), or $0.38 per share, in the first half of 2010, relative to the same period of 2009. The company reported an underlying pre-tax profit total of $9.6bn, an increase of 30% since last year. The Global Banking and Markets brought in the most profits for the first half of 2010, about $5.6m. HSBC attributed profit gain to its universal banking model that showed profits in every customer group in all regions outside North America and strong performance in Global Banking and Markets business. The model also repositioned Personal Financial Servicing to drive profitability and invested in building across the Asian region. The company's cost efficiency rate was 50.9%, up from 47.9% in the interim of 2009, due to a 3.8% decrease in net interest income to about $19.8m, a 2.3% increase in net operating income to $810m and an 8.7% increase in total operating expenses to $18.1m. All values are compared with the same period of 2009. Loan impairment charges and other credit risk provisions totaled $7.5m in the first half of 2010, the lowest for HSBC since the financial crisis began. Charges were nearly double in the same period last year. HSBC's total assets at June 30, 2010 were $2.4bn, up 2.3% since Dec. 31. Profit attributable to shareholders more than doubled to $6.8bn. To upkeep the strong profit return, HSBC plans to build its customer base and invest in the long term, including extending leadership in emerging markets such as India, China, Vietnam and Kazakhstan. HSBC said in its report that the U.S. Consumer Finance run-off portfolio continued to decrease and it agreed in principle to sell the remainder of the vehicle finance loan portfolio and other related assets for this branch to an unaffiliated third party in July. The sale is expected to close in Q310. Write to Christine Ricciardi.