Barclays PLC turned a profit during the first half of 2009 thanks in no small part to its presence in North America. HSBC Holdings PLC also made money — despite its ties across the Atlantic.
Going forward, however, both U.K. financial giants said they see signs that the economy may be stabilizing over here.
Brendan P. McDonagh, the chief executive of HSBC North America Holdings Inc., said in a conference call with reporters Monday that there are early "signs of improvement, as you can see."
HSBC pointed to its North American credit card business being profitable during the first six months of the year. Impairment charges in the company's personal finance business — while elevated from a year ago — also declined more than expected in the first half of the year.
Still, McDonagh said, "it's too early to call whether the economy has turned."
Jerry del Missier, the president in charge of global markets with Barclays Capital, Barclays investment banking arm, said the company continues to benefit from its purchase last year of Lehman Brothers' trading and investment banking operations.
Barclays Capital's profit before taxes more than doubled from a year earlier thanks to that transaction, to $1.76 billion. Its equities and prime services, investment banking, and fixed-income businesses were all up dramatically from a year ago.
Robust investment banking activity, not surprisingly, also bolstered HSBC's bottom line, with the company's net trading income rising 63% from a year earlier to $6.26 billion.
HSBC's troubled consumer finance division continued to drag the company down; HSBC Finance Corp. was heavily involved in subprime lending and has stopped making new loans.
HSBC Finance reported $7.3 billion in impairment charges, which was down from an $8.77 billion impairment in the second half of 2008, although it was more than a $6.6 billion impairment a year earlier.
During the first six months of the year, the run-off portfolio of HSBC Finance loans declined 9% to $91.2 billion.
HSBC said earlier this year that it would shut down the bulk of its consumer finance division while holding onto its credit card business and focusing on its retail branch arm.
McDonagh said both of those businesses showed promise during the first half of the year.
He said HSBC was one of the few banking companies to post a profit in its North American credit cards division.
He attributed that to management's efforts to shrink its credit card portfolio to about $40 billion at the end of June, from about $46.6 billion six months earlier.
On the retail side, the company's $169 billion-asset HSBC USA Inc. saw its net loss narrow to $338 million during the first half of the year, compared to a net loss of $452 million a year earlier.
HSBC USA continued its strategy of opening branches in cities, like Seattle and San Diego, where it can take advantage of its international ties to drum up business.
It opened 10 to 12 branches during the first half of the year, and could open up a total of 20 new branches this year, McDonagh said.
It could match that number in 2010, depending on market conditions.
He said HSBC has no intention of going head to head with the giant U.S. retail banks outside of its core market of New York. It is looking to grow in urban areas filled with businesses and individuals that do business overseas.
Its online savings balances also rose about $1 billion in the first half of the year, to about $15.5 billion.
Its total deposits, meanwhile, declined about 8.7% to $108.6 billion as the company opted not to renew "several large" time deposits, according to its mid-year results.
