By Gareth Vaughan
HSBC New Zealand has posted a 35% drop in September quarter profit after a big fall in fee and commission income, and also seen its residential mortgage book shrink.
HSBC's General Disclosure Statement (GDS) for the nine months to September 30 shows unaudited profit after tax down NZ$6.6 million, or 35%, from the same period last year to NZ$12.4 million. The fall came as other net operating income, primarily comprising fee and commission income, tumbled NZ$7.9 million, or 45%, to NZ$9.8 million. Overall operating income was down NZ$7.7 million, or 19%, to NZ$33.4 million with a NZ$1.8 million, or 9%, rise in net interest income to NZ$21.6 million unable to offset the steep fall in fee and commission income.
Operating expenses rose NZ$387,000, or 3%, to NZ$15.2 million and provisions for loan impairment came in at NZ$897,000 versus a recovery of NZ$193,000 in the September quarter last year.
Meanwhile, the bank's residential mortgage book contracted by NZ$28.6 million to NZ$915.2 million in the September quarter, according to the value of "on balance sheet" exposures shown in its loan-to valuation ratio disclosure in the GDS. With some of the lowest advertised, or carded, fixed-term mortgage rates in the market such as its 4.85% six-month, fixed-term interest rate, HSBC targets what it terms "premier" customers who must have minimum combined home loans of NZ$500,000 or NZ$100,000 in savings and investments with the bank.
See all bank advertised mortgage rates here.
During the three months to September 30 HSBC's advances to customers fell NZ$197.952 million to NZ$3.222 billion. Its total assets were down NZ$189.853 million to NZ$4.931 billion and its total liabilities fell NZ$188.060 million to NZ$4.916 billion. Total equity dropped NZ$1.8 million to NZ$14.2 million. HSBC's gross individually impaired assets fell NZ$4.6 million to NZ$72 million.
HSBC NZ is technically the New Zealand operations - or branch - of the Hong Kong-based Hongkong and Shanghai Banking Corporation Limited. In March the Financial Times reported the HSBC group was set to consider the sale or closure of seven Asian retail businesses including New Zealand, where it had decided to no longer focus investment. However, a spokeswoman for HSBC NZ strongly denied the report, saying the HSBC group wasn't exiting any Asia-Pacific market.
HSBC is one of 28 banks featuring on a global list of systemically important financial institutions, or too big to fail banks, that's compiled by the Basel, Switzerland-based international banking regulatory group the Financial Stability Board.
Earlier this year HSBC was forced to apologise and set aside US$1.5 billion to cover potential fines after a US Senate committee investigating money laundering claims said the bank had provided a conduit for "drug kingpins and rogue nations" involving money from Mexico, Iran and Syria. The bank is also facing an investigation by British tax authorities into data the Daily Telegraph said showed it provided accounts in the Channel Island tax haven of Jersey for alleged criminals.
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2 Comments
The only conclusion you can jump to here is that HSBC NZ is in real trouble, it's hard to see the parent company putting up with this sort of lackluster performance for too long. Compare this to all the other record profit announcements we are seeing from their competitors.
It's quite a surprise given the growth in Asian immigration and the fact HSBC is a household name up in Asia. I would have thought they'd be well positioned to benefit from Asia related business. Maybe ANZ (the only major bank with a decent Asian strategy) is cutting their lunch?
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