UK bank HSBC profit more than doubles as interest rates rise

Daily Insider News

Banking giant HSBC’s profits have more than doubled as it benefited from rising interest rates around the world.

The London-based lender posted pre-tax profit of $21.7bn (£16.9bn) for the first six months this year, compared to $9.2bn a year earlier.

That figure was also boosted by a $1.5bn provisional gain from its purchase of collapsed Silicon Valley Bank’s British business (SVB UK).

Central banks have increased interest rates as they try to curb price rises.

“There was good broad-based profit generation around the world, higher revenue in our global businesses driven by strong net interest income, and continued tight cost control,” said HSBC chief executive Noel Quinn.

Despite the surge in profit, the bank – which gets around two-thirds of its revenue from Asia – warned of the uncertain economic outlook.

It noted that UK customers may come under particular pressure as a combination of the high inflation and rising interest rates squeeze households.

“With more mortgage customers due to roll off fixed-term deals in the next six months, and further rate rises expected, tougher times are ahead,” Mr Quinn said.
Banks and building societies in the UK have come under pressure to pass on the interest rate rises to savers.

On Monday, banks offering unjustifiably low savings rates to their customers were told they will face “robust action”, the UK’s financial watchdog said.

The Financial Conduct Authority’s (FCA) warning came as part of a plan to ensure banks are passing on interest rate rises to savers.

The Bank of England has now raised its base rate 13 times in a row in an attempt to reduce inflation, and is expected to increase it again on Thursday.

However, while interest rates on mortgages have risen quickly, savings rates have not grown as fast, particularly for easy access accounts.

In May, HSBC said its profits would get a $1.5bn boost from the purchase earlier in the year of SVB UK for a nominal £1 ($1.25), in a deal led by the government and the Bank of England.

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