HSBC

HSBC “cautiously optimistic’ about growth despite trade tensions

HSBC said it was “cautiously optimistic” about global growth as it announced a 4.6% increase in pre-tax profit for the first half of 2018.

The bank said Asian economies remained robust despite growing trade tensions between China and the US. It also said its contingency plans for Brexit had not changed, despite growing warnings of a no-deal exit.

HSBC is Europe’s largest bank, but Asia is by far its biggest market. The Hong Kong-listed firm reported a pre-tax profit of $10.7bn (£8.3bn) in the first six months of the year, compared with $10.2bn in the same period last year.

The US and China imposed tit-for-tat trade tariffs on each other’s goods in early July, and the row has since escalated.

However, in a call with reporters, HSBC group chief executive John Flint said the bank was “pretty sanguine” about China’s growth outlook, despite the protectionist “rhetoric”.

“I think if there is a full blown trade war, of course it could impact our business,” he said. “But equally, while we recognise the potential threat, we haven’t seen any impact in our business so far.”

‘Robust’ plan

He added: “As for estimating the impact [of a trade war] it’s very difficult… There is a chance it will shave China’s GDP growth by a modest amount, but it’s too early to tell.”

HSBC also said it had put in place a “robust contingency plan” for a UK exit from the EU without the existing passporting or regulatory framework.

In recent weeks, several government ministers have warned that the chances of Britain not striking a trade deal with the EU before Brexit have increased.

But HSBC said the sum of cash it had set aside in preparation for a no-deal Brexit remained unchanged.

“When negotiation positions become clearer, we will update our contingency plan,” it added.

The bank’s results showed “strong progress” in the issuing of new credit cards in the first half of the year, notably in China, where 221,000 credit cards were issued during that period, just short of the 282,000 issued in the UK.

However, as the bank spent on hiring more frontline staff and expanding digital capabilities, its costs climbed 6% to $17.5bn.