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HSBC H1 Profit More Than Doubles, Says Outlook More Positive; Stock Up

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Shares of HSBC Holdings Plc were gaining in London and Hong Kong trading after the Asia-focused lender reported Monday that its first-half profit more than doubled, despite weak revenues.

Looking ahead, the company said while uncertainties remain, the outlook is more positive with evidence of growth in strategic areas.

The company expects mid-single-digit lending growth for the full year, which is expected to translate into low-single-digit RWA growth as it progresses with RWA reduction actions.

Further, the company now expects to move to within target dividend payout ratio range of 40 percent to 55 percent of reported earnings per ordinary share in 2021.

HSBC's Board also announced an interim dividend for first half of $0.07 per ordinary share, to be paid in cash with no scrip alternative.

For the first half, profit before tax was $10.84 billion from last year's $4.32 billion. Attributable profit was $7.28 billion, up from $1.98 billion a year ago. Earnings per share surged to $0.36 from $0.10 a year ago.

Adjusted profit before tax was $11.95 billion, compared to prior year's $5.65 billion.

The second-quarter profit before tax was $5.1 billion, a growth of $4.0 billion from the prior year. Profit after tax was $3.9 billion, $3.2 billion higher than the prior year.

The company's first-half revenue fell 4 percent to $25.55 billion from prior year's $26.75 billion. Adjusted revenue declined to $25.80 billion from $27.60 billion a year ago. The decline in revenues primarily reflected 2020 interest rate reductions and lower Markets and Securities Services or MSS revenue in Global Banking and Markets.

Net interest margin in the first half was 1.21 percent, down 22 basis points from last year.

The second-quarter revenue was down 4 percent, mainly due to lower revenue in MSS, as well as the impact of lower interest rates.

In Hong Kong, HSBC shares were trading at HK$43.45, up 0.93 percent. In London, the shares were trading at 401.70 pence, up 1.01 percent.

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