Barclays Capital and HSBC, which did not accept government aid last October when the financial crisis was at its worst, now seem to be in a position to exploit opportunities in investment banking sector – reported Financial Times.
The first half results of both the banking giants clearly reveal that they have overcome rising bad debts from consumers and businesses, riding on franatic trading in bonds, currencies and interest rate products. Barclays’ H1 profits almost doubled to £1 billion, while HSBC reported that its global banking and markets business realised a profit of £3.7 billion – almost a seven times increase against the second half of 2008.
John Varley, chief executive of Barclays, said: “Our intention continues to be that over time and in circumstances where Barclays Capital continues to grow about two-thirds of the group’s profit will come from global retail and commercial banking and Barclays Wealth.” Mike Geoghegan, chief executive of HSBC, said: “Through the turbulence of the past two years we have had a proven ability to deliver through diversity. We think our business is pretty sustainable, we’ve taken market share and we’re seen as a bank of choice because we’re strongly capitalised, we have great funding and we remain committed to our international network,” reported the newspaper.
However, industry experts are skeptical about their strategy in the medium term, in case the global financial downturn is more prolonged than expected. They say that investment banking profits are cyclical even though both the banks indicated that they would like to maintain momentum in the second half.
