Hongkong's Parent Reports A 26% Surge in Earnings
HONG KONG -- HSBC Holdings PLC, the parent of Hongkong and Shanghai Banking Corp., reported better-than-expected profits for the half, and analysts said the report could signal a healthy recovery.
The Hong Kong bank formed its British holding company in April. It reported $238 million in profits for the first six months of 1991, 21.6% more pro-forma than the component companies earned a year earlier.
Net income had plunged in 1990 because of bad loans at Hongkong and Shanghai's U.S. subsidiary, Marine Midland Banks Inc., and at recession-plagued Hongkong Bank of Australia. For the 1991 first half, analysts had expected a 15% to 20% improvement from $196 million in 1990.
Rebound Is Seen
"These are very good results," said Keith Wu, senior research manager at Citicorp Vickers. "You can see that the Hongkong Bank is on course for recovery."
The latest results indicate the bank is on target for a 1991 net profit of between $530 million and $580 million, the analysts said. They have predicted both Marine Midland and Hongkong Bank of Australia will return to the black in 1992.
Mr. Wu said he was raising his 1991 forecast to $550 million, from $530 million, because two subsidiaries - James Capel & Co., the U.K.-based stockbrokerage, and CM&M Group, the bank's primary dealer in U.S. Treasury securities - had returned to profit in the half.
"Hongkong Bank will definitely recover in 1991, and the pace of recovery will be even sharper in 1992," he said.
Marine Midland reported a $109.3 million loss in the first half of 1991, "largely as a result of real estate and commercial-loan-related credit quality expenses," the bank said. "Marine Midland is pressing ahead with measures designed to ensure a return to profit as soon as possible," but the company did not forecast when it would do so.
"Although Hongkong Bank of Australia reported an improved working profit, some additional provisioning and the burden of funding the nonperforming loan book resulted in an after-tax loss for the half year," it added. "This loss, however, was considerably less than in the same period in 1990." The bank gave no figures for the Australian unit.
Most of the group's Asian banking operations reported improved results, particularly in Hong Kong.
The bank declared an interim dividend 3.8% above last year's interim payout and predicted a final dividend 1.9% higher than last year's final figure. The figures were adjusted for the setting up of the holding company.