The scale of earnings at HSBC, the UK’s biggest bank, was sure to attract some unwanted attention.
The £17bn gain appears off the scale at a time when High Street banks are in the dock due to poor returns for savers, branch closures and poor customer service .
All of that is true, but HSBC is far more complex than most other UK banks, with the possible exception of Barclays.
Britain is only a fraction of what it does. However, there is reason to applaud his decision to take on Silicon Valley Bank in the UK at a time when the drive towards technology, artificial intelligence and life sciences is so critical for the nation. HSBC also fits well into the post-Brexit agenda of reaching out to the Asia-Pacific regions.
When Kemi Badenoch signed the incredibly so-called Comprehensive and Progressive Agreement for Trans-Pacific Partnership last month, he received a tepid welcome on the grounds that additional production would be negligible.
Eastern Promise: At HSBC and Standard Chartered, the UK has a reach into Asia like no other European bank
But what should not be forgotten is that at HSBC and Standard Chartered, the UK has a reach into Asia like no other European bank.
HSBC is on a dangerous path when it comes to Hong Kong-China relations. Bowing to Beijing has not been won by political friends.
But given its enormous role in the region in financing trade and as a provider of banking services to other commercial banks, realpolitik has been necessary.
The work done by Chief Executive Noel Quinn to reduce HSBC’s global presence, cut costs and improve margins is paying off.
North American sale is complete. France has been sold and a deal with Canada will be finalized next year.
All this allows for improved yields, a second dividend and a second buyback this year of £1.6bn.
That’s extremely helpful in keeping his army of Hong Kong private investors happy. It also removes the effort by mainland Chinese shareholder Ping An, with an 8 percent stake, to force a breakup.
In banking, you never really know where the next hit will come from, and there were concerns that Hong Kong and Chinese real estate could be a banana skin.
So far, so good.
lifting spirits
The late Sir Ivan Menezes used to compare Diageo to a start-up company looking to take the world by storm.
The Guinness group to Johnnie Walker may have only less than 5 per cent of the global spirits market, but with its luxury brands and innovation it has become one of the UK’s most impressive exporters.
Texas-born Menezes’ successor, Debra Crew, is just as excited about building premium brands and conquering new markets as he is.
Johnnie Walker remains the mainstream whiskey brand and newer spin-offs such as Blonde in Latin America and Gold seem to be doing just as well as the established label Black and the super expensive Blue.
Investment is being made to reopen so-called ghost distilleries in Scotland, which Crew sees as a significant long-term investment.
The group’s move into tequilas continues to be a huge growth category in the US, Mexico and around the world.
The group’s overall sales volumes fell in 2022-23, but the growing importance of luxury brands, which now account for 63% of sales, meant better margins and profits, which amounted to a whopping £4.6bn. at the operational level.
Crew is just as interested in discovering new luxury brands as its predecessor and also sees India as a great opportunity.
There is a whine about rising taxes in the UK with 70 per cent of a bottle of Scotch now taxed. But you have to believe the world of rarefied luxury, to which Diageo aspires, is not going to make a fierce dent.
Guinness is still essential. A £73m investment in Guinness at Old Brewer’s Yard in Covent Garden is proof. Sláinte.
Green light
After the bonanza came a 70 percent drop in BP’s profit in the second quarter, disappointing the market.
Despite his green push, CEO Bernard Looney acknowledges that oil and gas remain critical and has stemmed the energy giant’s escape from hydrocarbons to a 25 percent cut from 2019 daily production levels. by 2030.
The original 40 percent commitment has been withdrawn. That won’t endear BP to zero-carbon fanatics.
Critics should take comfort in his large investments in German offshore wind and UK biofuels, electric vehicle charging and hydrogen, making him one of the country’s biggest investors in climate change.
Just Stop Oil won’t be satisfied until the lights go out.
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