LONDON (Reuters) - HSBC’s (HSBA.L) half-year profit is set to rise 15 percent to more than $14 billion as a three-year cost cutting plan starts to pay off and lower bad debts compensate for a fall in revenue at Europe’s biggest bank.
The results, due to be released on Monday, are likely to lack the drama of British rivals last week - a rights issue at Barclays (BARC.L), a new chief executive at RBS (RBS.L) and the prospect of a swift government sale of shares in Lloyds (LLOY.L).
Instead, HSBC (0005.HK) will show how cutting costs and restructuring is essential for an industry struggling to grow.
Chief Executive Stuart Gulliver said in May he will redouble his efforts to drive down costs and could cut 14,000 more jobs as part of his push to lift profitability and streamline the complex bank.
Europe’s biggest bank by market value is expected to report pretax profit of $14.6 billion in the six months to the end of June, up from $12.7 billion a year ago, according to the average forecast of 14 analysts polled by the company.
Revenues are expected to fall 6 percent to $34.8 billion, but that will be offset by a drop in losses from bad loans of 2 billion pounds, or 43 percent, to $2.7 billion. Operating costs are forecast to fall 12 percent to $18.6 billion, driving the rise in profit.
Gulliver, who is two and a half years into his cost-reduction drive, had cut 46,000 jobs by May and sold or closed 52 businesses. He is expected to continue to retreat from countries where HSBC lacks scale.
The bank said in May that employee numbers could fall to between 240,000 and 250,000 by 2016.
Gulliver is expected to remain upbeat on dividend prospects, given the bank’s strong capital position and earnings generation.
A pledge in May to pay 40-60 percent of profit in dividends lifted HSBC’s shares, and investors are keen for further clues on how generous the payout will be.
Standard Chartered (STAN.L) (2888.HK), another London-based bank with strong businesses in Asia, is expected to say on Tuesday it remains on course for a full-year profit of about $8 billion, after recovering from a weak first quarter.
The bank last month brushed off fears that a slowdown in China’s economy would hit its growth and said annual profit should grow at just short of its 10 percent annual target after a decent second quarter.
Reporting by Steve Slater; Editing by Erica Billingham