HSBC UAE profits up 13% to $383m

The UK bank, which has been criticised for closing down Muslim accounts in UK, reports 9% rise in MENA profits, 12% decline globally
HSBC UAE profits up 13% to $383m
By Courtney Trenwith
Tue 05 Aug 2014 12:45 PM

HSBC has reported that its pre-tax profit in the Middle East and North Africa rose 8.8 percent to $989 million, despite an overall decline, in the first half of this year, the bank reported.

Overall pre-tax profit was down 12 percent to $12.3 billion from $14.1 billion last year – the company’s first profit decline since 2009. Global revenue fell 9.3 percent to $31.2 billion.

The MENA, where HSBC has $61.2 billion of assets against $51.6 billion in liabilities, accounted for 8 percent of the bank’s total pre-tax profit.

UAE operations remained the bank’s most profitable in the region, recording a $383 million pre-tax profit, up 13.64 percent compared to $337 million during H1, 2013.

Saudi Arabia, Egypt and Qatar contributed $259 million, $149 million and $66 million, respectively.

“Our Middle East business continues to perform well, albeit overshadowed by regional uncertainties,” CEO Stuart Gulliver said in a statement.

Pre-tax profit in Asia fell 15 percent to $7.89 billion and in Europe declined 18 percent to $2.26 billion. Earnings fell 20 percent in Latin America to $374 million.

“Whilst regulatory uncertainty persists, our balance sheet remains strong and our continuing ability to generate capital supports both growth and our progressive dividend policy,” Gulliver said.

The UAE’s strong performance was based on improved earnings from retail banking and wealth management business due to an increase in residential mortgage balances, partly as a result of growth in the property market and improved deposit spreads as a result of re-pricing initiatives, the bank said in its Interim Management Report.

The profit increase also comes despite the bank’s decision last year to cut back on some of its services in the UAE, particularly hitting small and medium sized firms.

Following a two-year internal review, the lender gave some of its small business customers 60 days to find a new bank as it sought to refocus its operations on larger, international businesses.

The bank also has been recently criticised in the UK, where it is headquartered, after it closed the accounts of several Islamic mosques, Muslim groups and local charities.

The entities, including the Cordoba Foundation and the Ummah Welfare Trust, received a letter from the bank indicating that their business no longer fitted HSBC’s “risk appetite”.

The cases sparked accusations that HSBC - whose tagline is “the world’s local bank” - had been conducting an Islamophobic campaign.

However, the lender said it had reassessed its relationships with customers in 70 countries after it was fined $1.9 billion in 2012 after it was implicated in money laundering through the US financial system.

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