HSBC posts big numbers from Middle East at it cuts staff in region

HSBC sees big gains in the Middle East in spite of the recent unrest, but cost-cutting measures worldwide are still looming for the bank after its layoffs in the region earlier this year.

HSBC has almost doubled its quarterly gains from its Middle East operations, as the bank lays off staff in the region and prepares for further cost-cutting across its business worldwide.

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The bank, the largest in Europe by market capitalisation, reported profits before tax of $335 million (Dh1.23 billion) for the first quarter, up 91.4 per cent on a year ago.

Improved profits in the Middle East were driven by "earlier actions to reposition certain portfolios, and improved credit conditions in Dubai", the bank said in a statement.

"While the UAE and Saudi Arabian economies continued to recover, political unrest in parts of the region contributed to a general reduction in customer activity."

At a global level, the bank posted a 52.2 per cent rise in net profits to $4.4bn (Dh16.1bn).

The improved profits come as HSBC plots wide-ranging measures to rein in costs, which have already seen the bank cut around 3 per cent of its workforce of 12,000 in the Middle East and North Africa.

Corporate lending saw the fastest growth during the quarter. Net loans and advances for the Middle East region rose 1.7 per cent to $26.7bn (Dh98bn), driven by a 4.6 per cent increase in corporate and commercial lending.

However, the increase masked a 2.7 per cent decrease in retail lending and a 23.1 per cent drop in lending to financial institutions.

"Revenues were marginally lower compared with Q1 2010 and modest lending growth and strong growth in deposits during the quarter reflected progress in consolidating our position as the market leader for cross-border trade finance in the region," the bank added.

Costs for the Middle East were 19 per cent higher than a year ago as a result of investments intended to grow the bank's business.

The plan for the HSBC's future will be revealed at an investor meeting on Wednesday. HSBC recently pulled out of retail banking in Russia and has begun restructuring its Latin American operations.

Asked whether the bank's Asian operations would see the same kind of cost-cutting as other parts of the world, Stuart Gulliver, HSBC chief executive, said: "There are a lot of places where we need to look at higher expenses before we ever get to Hong Kong."

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