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HSBC and Barclays return solid profits


HSBC and Barclays return solid profits


Britain’s top two banks have reported bumper profits but warned the recession is not over yet. HSBC – which is also Europe’s biggest bank – and Barclays each pre-tax profits for the first six months of the year of around 3.5 billion euros.

Barclays credited much of that to the purchase last year of Lehman Brothers’ US investment banking assets. And it was investment banking – things like selling bonds – rather than lending money to people and businesses that made the profits. Richard Hunter, Head of UK Equities at Hargreaves Lansdown, one of the Britain’s largest stockbrokers, said: “There is still the fall out from the recession to be dealt with, both in terms of individuals and companies, and of course, on that basis, it’s probably fair to say that the banks are past the worst of the recession, but it’s too early to say that they’re quite out of the woods yet.” But economists point out the recession will not end until the banks start giving loans to businesses and individuals again and the head of the UK’s Federation of Small Businesses, Stephen Alambritis, said that is not happening: “We still feel they’re not playing the game as far as lending to small firms is concerned. They are beginning to trickle out that money but in a grudging way, they’re charging a lot above the base rate of half of one percent.” The reluctance to lend is explained perhaps by bad debts losses on mortgages and commercial loans that were not paid back; Barclay’s jumped 86 percent in the first half and HSBC’s almost 40 percent.

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