HSBC sells up in Brazil as profits jump on Hong Kong boom
By Lawrence White and Steve Slater
HONG KONG/LONDON (Reuters) - HSBC Holdings (HSBA.L: Quote) beat expectations with a 10 percent rise in first-half profit thanks to a strong performance in Hong Kong and has agreed a $5.2 billion sale of its business in Brazil.
Europe's biggest bank by market value is to sell the unprofitable Brazilian operations to Banco Bradesco SA (BBDC4.SA: Quote), Brazil's second-biggest private-sector bank, for a higher than expected 17.6 billion reais ($5.2 billion).
The sale is part of a plan by Chief Executive Stuart Gulliver to shed underperforming business and reduce costs, including almost 50,000 job cuts, to try to improve returns. Gulliver said HSBC was likely to keep its bank in Britain because of its strong prospects.
HSBC said profit growth was driven by an investing frenzy in Hong Kong among individual customers prompted by China's soaring markets earlier in the year.
HSBC has become reliant on Hong Kong for profits as its businesses in Europe, the United States and other emerging markets slow. The London-based bank has said it is considering moving its headquarters back to the former British colony.
It intends to complete a review of its headquarters by the end of this year and Hong Kong is seen as the most likely alternative.
The market turmoil in China in the past few weeks could mean a gloomier second-half outlook. HSBC said its performance in July was satisfactory, but said the banking environment remained challenging and the economic climate was uncertain in China and the euro zone.
"We don't see anything alarming coming from what has happened recently in China, but there undoubtedly will be some muted impact on our business both from the sell-off in the stock market and from the more reduced economic activity we have seen," Gulliver told reporters. Continued...