The largest bank in Europe HSBC slid in trading in London following the release of its earnings that missed estimates of analysts. CEO Stuart Gulliver announced that the fast growing emerging markets for the banks are now starting to slow down.
Net income for the first half was up 10% to $10.29 billion after loan impairments in the U.S. fell, said the lender based in London. That however, was less than the estimate of $10.57 billion by Wall Street analysts.
Stock prices dropped as much as 5%, its biggest drop since November of 2011. HSBC, which has operations in over 80 countries, said the market in mainland China slowed down unexpectedly during the first three months of 2013, while growth in Latin America eased during the first six months of the year on weak consumer demand.
Gulliver said that the bank’s fastest growing areas of recent are now slowing down as even emerging markets have their cycles, which he said has impacted the bank’s revenue and profit growth.
Growth, said Gulliver, remained subdued on economies in the West. Gulliver reversed the banks expansion in consumer banking in the U.S. and sold or closed 54 of its businesses since taking over the top spot back in 2011.
He is focusing on markets that are the bank’s most profitable. Across the globe, the bank has 6,600 offices and more than 55 million clients.
The economy in China has slowed down for two consecutive quarters, extending its sub 8% expansion to its longest in over two decades.
Shares at HSBC fell 5.4% at midday on Monday.
HSBC also missed its estimates in part because of lower yields on its portfolio of low risk investments.
Income at the bank’s management business, which takes care of investing in assets like deposits at central banks and governmental bonds, dropped by 24% to $1.67 billion.
