HSBC first-quarter profits almost double

Fall in bad debts and cost-cutting measures push UK's biggest bank to £5.4bn profit in the first three months of the year, 95% higher than in 2012

Profits at HSBC nearly doubled in the first three months of the year as bad debts fell and chief executive Stuart Gulliver took the axe to costs and jobs.

The workforce has fallen from 300,000 to 260,000 since his promotion to run the bank at the start of 2011, Gulliver said, and he "could not give any assurances" that more job reductions would not follow.

Last month, the bank announced 3,166 jobs were being cut, further infuriating unions by describing the action as "demising".

HSBC branch in Manhattan, New York City: profits have nearly doubled for the first quarter of 2013.

The scale of the job reductions at HSBC emerged as the UK's biggest bank reported a pre-tax profit of $8.4bn (£5.4bn) from $4.3bn a year earlier. The 95% increase included gains on disposals of $1.1bn, reclassification of a business as well as a negative impact on the cost of buying back its own debt.

Gulliver is to give a strategic update next week that may give more clues on further job cuts. He has previously said 30,000 jobs would go by the end of his three-year programme. He admitted he was ahead of this target with 26,000 having been cut through cost reduction measures and 14,000 through businesses being sold off. He has conducted 52 disposals since he was promoted from running the investment bank, describing his mission as transforming the "world's local bank" into one with with "courageous integrity".

Last year, the bank entered into a deferred prosecution agreement with the US department of justice and paid a record £1.2bn fine for money-laundering offences. Gulliver said the terms had been agreed but that an independent monitor to oversee its business had yet to be named.

Sandy Chen, banks analyst at Cenkos, said "all the big levers moved in the right direction in the first quarter" as the bank's shares gained 2.5% to 732p by mid-morning in London.

Gulliver, who is awaiting approval from the Chinese authorities to list its shares in the country, said the bank was "moving into calmer waters but we think there are challenges ahead".

He cited the eurozone – where the bank expects the 17-nation single currency bloc to contract during 2013 – but pointed to growth in China and the US.

"Although broad macroeconomic challenges persist, we expect the mainland Chinese economy to accelerate after a slower than expected start to the year. We forecast that the US will continue to outperform its peers, though the pace of growth will be slow compared with past experience. We expect that the eurozone will contract, that emerging markets will grow at around 5%, and that global growth will be around 2% in 2013," the bank said.

The amount set aside to cover bad loans fell 51% to $1.2bn, largely as a result of fewer loan provisions in the US, where the bank has been pulling out of troublesome businesses.

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Article source : http://www.guardian.co.uk

UK car sales boom raises industry hopes

Car sales jumped by almost 15% in April compared with the same month last year, defying a slump across Europe

Car sales in the UK continue to storm ahead, defying the present economic climate and in contrast to the dire markets across Europe.

Car sales jumped by almost 15% in April compared with the same month last year and are 9% higher in the first four months of 2013. Sales to individuals drove the numbers higher, with private sales up 32% compared with April last year.

Volkswagen has warned that the European downturn could hit the group's profit in the coming months

 Britons have been attracted by bargain deals on new cars, as well as attractive financing packages. Some motorists have also been prompted to buy more fuel efficient cars because of high petrol prices.

Analysts say there may also be pent-up demand. Howard Archer of IHS Global Insight said: "We've had bad economic times for an extended period. A lot of people have delayed buying new cars, so more and more people are getting to the stage where their cars have had it."

The figures are an encouraging sign for the UK economy. Archer said: "It does lift hopes that consumers are prepared to spend on big items."

But he noted that the car market has outstripped the wider economy for some time now. Last year, new car sales rose by 5.3%, while the economy inched ahead by just 0.3%.

Despite the buoyant start to the year, Archer said the car market faces difficult conditions in the coming months: "A serious concern for the industry is that consumers could rein in their spending on big-ticket items over the coming months as their purchasing power is squeezed by higher consumer price inflation and muted wage growth.

"There have also been recent signs that employment is stuttering after growing markedly through 2012."

Companies are also under pressure to contain costs and business confidence remains fragile. Archer said: "A worry for the car industry therefore is that many fleet operators and businesses will delay replacing vehicles to help contain their costs in an extended weak and uncertain economic environment."

The health of the UK car market stands in sharp contrast to Europe, where sales slumped by more than 10% in March. Analysts were particularly concerned by a 17% slump in new car sales in Germany.

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Article source : http://www.guardian.co.uk

Former Tory chancellor Lord Lawson calls for UK to exit EU

The former chancellor of the exchequer, Lord Lawson, has called for the UK to leave the European Union.
He predicted any changes achieved by David Cameron's attempts to renegotiate the terms of the UK's relations with the EU would be "inconsequential"

But Downing Street said the prime minister remained "confident" that his strategy "will deliver results".

Mr Cameron is facing calls to bring forward a promised referendum on the UK's EU membership.

'Warm embrace'

He says he will hold a vote early in the next parliament - should the Conservatives win the next general election - but only after renegotiating the terms of the UK's relationship with the EU.

However, Lord Lawson said any such renegotiations would be "inconsequential" as "any powers ceded by the member states to the EU are ceded irrevocably".

The BBC's political editor Nick Robinson said Lord Lawson's intervention was a "big moment" in the EU debate.

 The peer - who was Margaret Thatcher's chancellor for six years - voted to stay in the European Common Market, as the EU was known in 1975, but said: "I shall be voting 'out' in 2017."

He said he "strongly" suspected there would be a "positive economic advantage to the UK in leaving the single market".

Far from hitting business hard, it would instead be a wake-up call for those who had been too content in "the warm embrace of the European single market" when the great export opportunities lay in the developing world, particularly Asia.

"Over the past decade, UK exports to the EU have risen in cash terms by some 40%. Over the same period, exports to the EU from those outside it have risen by 75%," he added.

Withdrawing from the EU would also save the City of London from a "frenzy of regulatory activism", such as the financial transactions tax that Brussels is seeking to impose.

Lord Lawson said his argument had "nothing to do with being anti-European".

"The heart of the matter is that the very nature of the European Union, and of this country's relationship with it, has fundamentally changed after the coming into being of the European monetary union and the creation of the eurozone, of which - quite rightly - we are not a part.

"Not only do our interests increasingly differ from those of the eurozone members but, while never 'at the heart of Europe' (as our political leaders have from time to time foolishly claimed), we are now becoming increasingly marginalised as we are doomed to being consistently outvoted by the eurozone bloc.

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Article source : http://www.bbc.co.uk 

HSBC profits almost double to $8.4bn as bad loans fall

The rise, an increase of 95% on the same quarter in 2012, came as HSBC reported a big fall in losses from bad debts and provisions for other risks.Loan impairment charges fell 51% to $1.17bn, with the fall most notable in the US, HSBC said.Chief executive Stuart Gulliver said the US would continue to strengthen.In China, after a slower start to the year, Mr Gulliver said he expected the economy "to accelerate" during 2013.

 Cutting costs

Since taking over in early 2011, Mr Gulliver has been trying to streamline operations, reduce complexity and cut divisions that are unprofitable. HSBC has sold or closed 52 businesses since he became chief executive.We have strengthened our capital position and remain one of the best-capitalised banks in the world, allowing us both to invest in organic growth and grow dividends," the company said in a statement.

In March, HSBC, which has eliminated about $3.6bn of costs, said there was room for a further $1bn in savings this year.

Costs in the first quarter were down 10% from a year ago, and now consist of about 53% of income. The bank is aiming to get the percentage below 52% by the end of the year.

Across Europe, smaller rivals are also cutting back, with French banks Societe Generale and Credit Agricole on Tuesday saying they must keep cutting costs to help offset a weak domestic economy.

Richard Hunter, head of equities at Hargreaves Lansdown Stockbrokers, said: "Set against a mixed bag of trading updates so far from its peers, HSBC has delivered a statement which not only ticks all of the boxes, but propels the bank to premier status in the sector."

The profit figures were higher than many analysts had forecast, and HSBC shares were up almost 3% in morning trading.

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Article source : http://www.bbc.co.uk