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HSBC 2 AUGUST 2021 HSBC HOLDINGS PLC 2021 INTERIM RESULTS - HIGHLIGHTS Noel Quinn , Group Chief Executive , said : " These are good results that reflect the return of growth in our main markets and marked progress in the execution of our strategy . We were profitable in every region in the first half of the year , supported by the release of expected credit loss provisions . Our lending pipeline began to translate into business growth in the second quarter and we further strengthened that pipeline during the half . This performance enables us to pay an interim dividend for the first six months of 2021 . I'm pleased with the momentum generated around our growth and transformation plans , with good delivery against all four pillars of our strategy . In particular , we have taken firm steps to define the future of our US and continental Europe businesses , and further enhanced our global Wealth capabilities . We are focused on executing the growth and transformation plans we announced in February . " Financial performance ( 1H21 vs 1H20 ) • Reported profit after tax increased by $ 5.3bn to $ 8.4bn and reported profit before tax increased by $ 6.5bn to $ 10.8bn . A fall in revenue reflected 2020 interest rate reductions and lower Markets and Securities Services ( ' MSS ' ) revenue relative to a strong 1H20 . This was more than offset by releases in our expected credit losses and other credit impairment charges ( ' ECL ' ) . Reported profit in 1H20 included an impairment of software intangibles of $ 1.2bn , mainly in Europe . • All regions profitable in 1H21 , notably HSBC UK Bank plc reported profit before tax of over $ 2.1bn in the period . Despite interest rate headwinds , there was continued strength in Asia and a material recovery in profitability in all other regions , reflecting a net release in ECL as the economic outlook improved . • Reported revenue down 4 % to $ 25.6bn , primarily reflecting 2020 interest rate reductions and lower MSS revenue in Global Banking and Markets ( ' GBM ' ) . These reductions were partly offset by net favourable movements in market impacts in life insurance manufacturing and valuation adjustments in GBM . • In 1H21 , lending increased by $ 21.5bn on a reported basis , reflecting growth in Wealth and Personal Banking ( ' WPB ' ) and Commercial Banking ( ' CMB ' ) . Deposits grew by $ 26.3bn on a reported basis , with increases in all global businesses . • Net interest margin ( ' NIM ' ) of 1.21 % in 1H21 , down 22 basis points ( ' bps ' ) from 1H20 . NIM in 2021 of 1.20 % remained stable compared with 1Q21 . • Reported ECL were a net release of $ 0.7bn , compared with a $ 6.9bn charge in 1H20 . The net release in 1H21 primarily reflected an improvement in the economic outlook since 2020. The reduction also reflected low levels of stage 3 charges in 1H21 , as well as the non - recurrence of a large charge in 1H20 related to a corporate exposure in Singapore . • Reported and adjusted operating expenses increased 3 % , primarily due to a higher performance - related pay accrual as profitability improved , as well as continued investment , partly offset by the impact of our cost - saving initiatives . • • Return on average tangible equity ( ' ROTE ' ) ( annualised ) of 9.4 % , up 5.6 percentage points compared with 1H20 . Common equity tier 1 ( ' CET1 ' ) ratio of 15.6 % , down 0.3 percentage points from 31 December 2020 , reflecting an increase in RWAs from lending growth and a decrease in CET1 capital including the impact of foreseeable dividends . The Board has announced an interim dividend for 1H21 of $ 0.07 per ordinary share , to be paid in cash with no scrip alternative . Financial performance ( 2021 vs 2020 ) • Reported profit after tax up $ 3.2bn to $ 3.9bn and reported profit before tax up $ 4.0bn to $ 5.1bn . Reported revenue was down 4 % , mainly due to lower revenue in MSS , as well as the impact of lower interest rates . This was more than offset by net releases in reported ECL and lower reported operating expenses . Outlook for 2021 • • • The execution of our strategy continues at pace , including the announcement of transactions in relation to our retail operations in France and mass market retail operations in the US . Despite continued revenue headwinds , notably in fixed income markets relative to strong comparative periods , as well as low interest rates and Covid - 19 impacts , there are emerging signs of unsecured personal lending and commercial lending growth . We expect mid - single - digit lending growth for the full year , which is expected to translate into low - single - digit RWA growth as we progress with our RWA reduction actions . Given current consensus economics and default experience , ECL charges for 2021 are expected to be materially lower than our medium - term range of 30bps to 40bps of average loans and possibly a net release for the year . Uncertainty remains as countries emerge from the pandemic at different speeds , government support measures unwind and new virus strains test the efficacy of vaccination programmes . To reflect this uncertainty , at 30 June 2021 around $ 2.4bn remained of the stage 1 and stage 2 ECL allowance uplift we made during 2020 . • Our cost reduction programme remains on track . We expect adjusted operating expenses for 2021 to be broadly in line with 2020 , excluding the benefit from a reduced bank levy . This remains subject to final decisions on performance - related pay , which will primarily reflect the performance of the Group . • The Group maintains a strong capital position and is well placed to fund growth and step up capital returns . Reflecting the current improved economic outlook and operating environment in many of our markets , we now expect to move to within our target dividend payout ratio range of 40 % to 55 % of reported earnings per ordinary share in 2021 .