UK bank earnings: Barclays, HSBC, Standard Chartered

Earnings, earnings, and more earnings. First up, Barclays. (Sorry, I know I’m a day late.)

barclays

Barclays Capital, the investment banking arm of Barclays, made a significant contribution to the earnings of the bank in its most recent quarter, although overall results still failed to meet expectations.  BarCap’s profits soared to £1bn, double what it was last year, increasing the firm’s pretax profit by 8 per cent to £2.984bn, missing expectations of £3.5bn.

Outside of investment banking, it’s not as rosy.  The UK retail banking’s pre-tax profits fell by 61 per cent to £268m while its commercial bank registered a £404m pre-tax profit, which is 42% lower than last year’s.  There was also an increase in impairment charges of 86%, a strong reflection of worsening consumer loans.

Having said that, Barclays CEO Bob Diamond spoke of plans to expand its operations in Asia, which could see the firm hire as much as 1,000 people this year.

Next in line, Hong Kong and Shanghai Banking Corporation.

hsbc

For competitor HSBC, pre-tax profits saw a decline of 51% –  from $10.2bn to $5bn, which barely beat estimates of $4.9bn by analysts.  Just like Barclays, HSBC took a lot of good from its investment banking division which posted more than double its profit from last year.  For the first half of 2009, pre-tax profits soread to $6.3bn versus the $2.7bn recorded last year.

Looking at the personal banking arm of the firm, it swung to a loss of $1.2bn from last year’s $2.3bn, while profits from commercial banking fell 47% to $2.4bn.  Impairment charges did not take a toll in its earnings as big as it did in Barclays.  Provisions were $13.9bn in the first half, just 39% higher than last year’s.

The shares of both banks surged in European trading despite the earnings miss because of the belief that we’ve already seen a bottom in this crisis, as stated by their respective CEOs. We should not also forget that these two banks did not fall under the control of their governments, having decided not to take ‘bailout’ money while everyone else ran to the arms of Alistair Darling and the gang.

An excerpt from a piece off of The Economist reads:

WHEN the rug was pulled from under Britain’s big banks, only HSBC and Barclays remained upright, avoiding state rescue by raising capital from private sources. Now their sense of superiority is likely to be compounded by first-half results. On Monday August 3rd both banks reported big profits. By contrast, Lloyds Banking Group and Royal Bank of Scotland, which are now state-controlled, are both forecast to make losses.

The entire piece HERE.

Here’s an additional set of charts from the FT highlighing some of the results released by both banks (click to enlarge):

barchsbc ft

Last for now, Standard Chartered.

std chartered

Standard Chartered’s pre-tax profit for the first half of 2009 went up from $2.586bn last year to $2.838bn, an approximately 10% increase.  Net income stood at $1.93 billion, beating the $1.8 billion estimate.  Loan impairment losses as well as other risk provisions amounting to $1.1bn drag down the earnings.

Today, the firm also announced plans to raise £1bn via share placing to help fund its expansion in Asia.  “If the Standard Chartered placing raised the planned £1bn, it would increase its core tier one ratio – a measure of capital strength – from 7.6 per cent to 8.4 per cent”, says an FT report.

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