HSBC turns in profit as Chancellor criticises banks for not lending
Posted by admin in Management & Execution on Tue, 03/08/2010 - 09:15
HSBC reported pre-tax profits of £7bn for Q1 this year (more than double last year’s figure), while chancellor George Osborne renewed calls for banks to lend more to businesses.
Profits are up across HSBC's global branches, except in North America, which saw losses of $80m. UK profits increased by 26%, reaching $2.1bn.
The good news should be an incentive for banks to start lending to businesses again, said George Osborne in an interview with the Sunday Telegraph this week. "Every small and medium-sized company that I have visited in recent weeks has had some problem with their bank – either they have found it difficult to renew their overdraft or they demanded additional collateral, often someone's house," the Chancellor said.
"The danger is that, particularly next year, when there is a huge amount of refinancing required, that the small and medium-sized businesses suffer from a lack of access to working capital."
He added that the government "will not tolerate" banks piling the pressure on small and medium-sized businesses and said they had an "economic obligation" to lend.
The markets reacted positively to HSBC’s results, with HSBC’s shares going up by almost 5% today. Other banking stocks also benefited, with Barclays up nearly 3% and Lloyds and RBS posting increases of more than 5%.
Angela Knight, chief executive of the British Banking Association (BBA) said: "It is a very positive thing that the banking industry is back in profit and shows that the write-offs, losses and failures across the business have been absorbed."
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