HSBC sees 21.1% drop in interim profit

HSBC has reported a pre-tax profit of €46.6 million for the six months ended June 30, down €12.4 million, or 21.1 percent over the same period last year.

Loans and advances were up by €148.6 million, or 5.2 percent to €2,968.9 million, while core customer deposits were up by €18.8 million to €3,394.5 million.

Alan Richards, the bank's CEO, said the first half of 2008 had been challenging and the profit of €46.6 million was "disappointing". The prior period, however, included significantly stronger revenue flows from pre-euro conversion foreign exchange and investment dealing activities. Overall, profitability remained strong, with a return on equity of 22 percent.

The bank said the primary reasons for the drop in profit were one-offs such as the changeover to the euro which had caused a drop in exchange revenue, and increased competition in the lending portfolio even though revenue in this sector had increased.

The board is declaring an interim gross dividend of 11.9 euro cents per share (7.7euro cents net of tax). This will be paid on August 22.