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.
More Business news: Editor's pick of today's headlines
Last Updated: May 9, 2011
Emirates' world trade set to grow despite regional unrest UAE exporters and importers are more cautious about the trade outlook after recent instability in the Middle East and North Africa. Read article
Mena jet orders to reach $390 billion Boeing has upgraded its order forecasts for the region. Read article
Pac-Man adds punch to local TV Middle East media companies look to capitalise on popularity of Manny Pacquiao in the region and beyond. Read article
Dealmakers hungry for action Industry Insights // Mergers and acquisitions activity is rising globally, but the Middle East will be playing catch-up for some time to come. Read article
Sales risk over Dubai Summer Surprises change Retailers have given a mixed response to plans to change the Dubai Summer Surprises shopping festival. Read article
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."
[ends]
