Bumper profits for Barclays and HSBC
Updated on 03 August 2009
Two of the UK's biggest banks, Barclays and HSBC, have made almost £3bn profit each in the first half of the year. Ben King reports.
But while their investment arms are reaping the rewards, overall results are still being pegged back by the problems in the real economy.
Banking giant Barclays announced profits of £2.98bn for the first half of 2009, up eight per cent on the same period last year.
Rival HSBC chalked up exactly the same figure, announcing pre-tax profits of £2.98bn for the same period. For HSBC, their profit is down more than half on the same period last year, but an improvement on the second half of 2008.
Both banks avoided taxpayer-funded bailouts at the height of the financial crisis last autumn.
Despite the fall in profits, HSBC said results were better than it expected at the start of the year in an "unprecedented" economic climate.
The 51 per cent drop in HSBC's pre-tax profits came after its bad debt charges soared 39 per cent. But the company also benefited from record investment banking profits of £3.75bn during the first half of the year - more than double the level of 2008.
HSBC chairman Stephen Green said it was likely that "we have passed, or are about to pass" the bottom of the cycle in financial markets, but he also warned: "The timing, shape and scale of any recovery in the wider economy remains highly uncertain."
Barclays Capital, the firm's investment banking division, doubled its profits to £1.05bn after taking a big risk in salvaging the investment banking business from the wreckage of failed Lehman Brothers.
But Barclays, like HSBC, were also hit by the "challenging" economic conditions, with their retail banking arm seeing profits fall 61 per cent to £268m.
Barclays chief executive John Varley said: "The environment has remained very difficult in 2009 as a consequence of the onset during 2008 of economic recession in most parts of the world in which we operate."
Both HSBC and Barclays managed to shore up their finances in the crisis without a government bailout. Barclays instead turned to Middle East investors for funding and has also agreed the £8.2bn sale of its Barclays Global Investors fund management division.
Barclays' shares fell to lows below 50p in January, but have recovered to trade around 300p as fears of state intervention passed.
