UK banks report large profits

Barclays and HSBC both see profits of $5bn for first half of 2009 despite rise in bad debts.

    HSBC profits were just half of the $10.2bn it made in the same period a year ago [EPA]
     

    Recovery 'uncertain'

    HSBC, the largest bank in Europe, said debts had been written off in the US, Europe and Asia.

    Stephen Green, HSBC's chairman, said: "It may be that we have passed, or are about to pass, the bottom of the cycle in the financial markets.

    "Nonetheless, the timing, shape and scale of any recovery in the wider economy remains highly uncertain."

    In a statement, Barclays said it had made a "good start" to 2009 and was "strongly positioned for the upturn".

    Both banks have avoided coming under state control, unlike many of their British rivals.

    State-controlled Lloyds and Royal Bank of Scotland, as well as nationalised Northern Rock were devastated by the global financial crisis and were bailed out by the UK government.

    All three are due to report results later this week.

    Barclays avoided nationalisation in the wake of the credit crunch by courting investment from Abu Dhabi and Qatar in order to bolster its finances.

    Bonus concerns

    HSBC and Barclays' profits raise the prospect of large bonuses for its executives which has proved controversial in the current economic climate.

    Analysts argue that many bank executives were attracted by short-term profits and the consequent bonuses, damaging their ability to take well-judged business risks, and helping spark the global financial crisis.

    The official spokeswoman of Gordon Brown, the UK prime minister, said on Monday that banks needed to ensure that they were chasing long-term stability rather than quick profits.

    "We need to make sure that what we see is more credit flowing into businesses and households ... it's important we're looking at long-term stability and not short-term profit," she said.

    HSBC shares were up 6.15 per cent in early trading, while Barclays rallied eight per cent, as investors took encouragement from the possibility that the banking sector might be through the worst of the downturn.

    SOURCE: Agencies


    YOU MIGHT ALSO LIKE

    Revival: The Muslim Response to the Crusades

    Revival: The Muslim Response to the Crusades

    This part of 'The Crusades: An Arab Perspective' explores the birth of the Muslim revival in the face of the Crusades.

    Saudi Design Queens

    Saudi Design Queens

    Two young Saudi women host a design event that is pushing boundaries of art and tradition.

    Africa is not poor, we are stealing its wealth

    Africa is not poor, we are stealing its wealth

    It's time to change the way we talk and think about Africa.