HSBC reports £7.7bn profits

[skotbites]

I'll be looking forward to my bonus then!!!!

I read that it works out at £70 profit from each customer in the uk per year. The uk is only a small slice of the HSBC pie. first direct (who I work for) household bank (HFC) and a few other are all part of HSBC.

Scott

[DaBeeeenster]

No, why should profits be restricted? The whole point of the free market is the drive for profit which increases efficiency by lowering costs. Well done to HSBC!

I take your point, but where does it stop? I feel there is a fundamental problem with the notion of business and their context within the free market.

As George Monbiot said:

The goal of sustaining a system which relies upon infinite growth in a finite world is as unrealistic a utopian project as anyone could devise.

I agree with this. Where does it end? £10 billion profit? £100 billion?

if they released profits of a trillion dollars, would you still be saying "Well done"? Where does social responsibility come into this? I read an article on credit card debt, and the journalist managed to get a bank to offer his dog a £10,000 limit! Is that responsible? If the bank is financing deals in, say, China that promote human rights abuses, would you still say "well done"?

I understand they have an obligation to their shareholders to maximise profits (as an owner of a small business I appreciate the need for profits ) but do you really think that is all businesses should care about?

How about a sliding scale of corporate tax, based on a profit per employee ratio? It would have to be adopted world wide, and protection free, but surely that is a more realistic and sustainable solution?

Who is that 7 billion really helping? The "trickle down" concept seems to be worryingly absent here...

[Gordy]

They are a business in this world to make money for their shareholders the board would be sacked if they did anything that didnt maximise profits.

Think of all the people they give jobs too, to say they dont give anything back is wholey incorrect.

[DaBeeeenster]

They are a business in this world to make money for their shareholders the board would be sacked if they did anything that didnt maximise profits.

Do you think this is a sustainable system in the current market environment? With globalisation making the world smaller and smaller, big companies are getting bigger and bigger both organically and through M&A's. I just dont think I agree with the basic tenet. There should be pause for thought regarding both ethics and social resposibility; two areas that pan-global companies have shown scant regard in...

Think of all the people they give jobs too, to say they dont give anything back is wholey incorrect.

This is a fair point. However, we are talking about profits. HSBC could have made 50p profit and would still be providing the same jobs.

[Gordy]

Ethics dont come into business very often how ever big or successful a business is.

If the system wasnt sustanable we would have come a cropper a long time ago. The 7billion isn't just going to sit an account it will be reinvested. There is no point in having a cash stockpile doing nothing.

[DaBeeeenster]

Ethics dont come into business very often how ever big or successful a business is.

That's precisely my point!

If the system wasnt sustanable we would have come a cropper a long time ago. The 7billion isn't just going to sit an account it will be reinvested. There is no point in having a cash stockpile doing nothing.

A lot of it will go on share dividends. The rest will be reinvested to make sure that....they make even more money next year.

I really dont think the system is sustainable. The gap between rich and poor (globally) gets wider every year. Western consumption of resources like oil and natural gas continue unabated, and with India and China coming on board, this is set to get a lot worse.

[Russ]

revol, i take it u
a) dont have a bank account

or

b) refuse any interest they pay u?

[revol68]

russ are u touched son? of course ive got a bank account thats where i get my wages put into.

and b im not likely to get much interest since my account is in the red and has been for 3 years.

what exactly are u trying to prove by these inane points russ? even if i had an account that gathered interest the fees i pay to my bank far outstrip what i get back.

Russ u seem to be saying that i would be a hypocrite for having a bank account and criticising the banks, this is retarded its like saying that if u have a job u can't criticise wage slavery.

russ do u think before u aim that lil snipin rifle at me.. u seem to have a habit of trying to score points against me.

[Russ]

i have NOTHING against you mate. but look at it this way, your saying, that banks are bad for makin money and investing it in things you dont agree with, but they do give you a "cut" of what they make

[DaBeeeenster]

Banks do not operate for the wellfare of their customers. They operate for the wellfare of their shareholders. (Well, publicly owned banks do, anyway, or at least they should).

They dont give out interest because they are good hearted. They give it out because everyone else in the market does, and they would lose custom if they didn't.

I find this line of argument that you can only attack huge profits made by banks if you have all your saving stuffed under your mattress, no savings and no pension somewhat ludicrous.

[Russ]

fair points beenie.

but ask yourself this, when you go to take out a loan, open an account with a bank

do you think about - the amount of APR you'll pay and interest you get?

or

what they do with the money they'll make from you?


i think its unfair to tackle HSBC, i dont agree with what they might do with there cash, but they've work them off to get that much profit.

[revol68]

russ saying they givecustomers a cut of what they make is ridiculous when they make their money off the customers in the first place. Its makes as much sense as saying that your boss gives u a cut of the profits because of ur wages when in actual fact it is ur labour that facilitates the profits in the first place.

[Slick]

if they released profits of a trillion dollars, would you still be saying "Well done"? Where does social responsibility come into this?

Yes I would be saying well done if they managed to make a trillion dollars. A business shouldn't have social responsibility unless it is in their financial interest and as long as they are not breaking any laws. The role of the Government is to protect the public, if they think certain business practices are unfair, they should bring in legislation which makes the business comply to them.

But I don't think the Government should say you are not allowed to earn over X amount of pounds. That would cause allsorts of problems, firstly when the firm reaches that amount of profit they would have no motive to lower costs, leading to cost push inflation. There would be a lot less research into more efficient ways of producing and product innovation so the UK would fall behind. It would also encourage British firms to move abroad where they can make as much profit as possible, which would be bad for the economy. It would mean smaller firms would be put off with merging with another firm so the benefits of synergy would be lost.

It may not be "fair" if another company earns a lot more than everyone else but life's not fair and its a reward for the risks that they've taken.

[DaBeeeenster]

Could you explain to me how profits of £7bn are in any way demonstrating efficiencies in the market? Surely they are demonstrating ineffeciencies in the market?

In a perfectly efficient market, one would expect company profits to exist, but surely not to that extent? Free market competition should apply downward pressure on profits, not upwards pressure.

My post stated that there should be a sliding scale of corporation tax. Did you read that? Regarding your point about innovation and efficiencies, I agree that this is important (Britain has had a history of large yet profitable R&D spends which I agree is a good thing). Maybe revenue re-invested into areas of business such as R&D, social responsibility, training of young people etc. etc. could become part of a tax break, allowing companies to write off this spend against corporation tax.

I dont know. I dont have all the answers. I'm just thinking out aloud really.

The one thing I do know is that if, in the future, HSBC post profits of 1 trillion dollars (for example), that money will be going to the very few, very rich elites, not to the masses who actually make up the customers of (and hence, to an extent, are) HSBC. I fail to see how this is either fair, or efficient.

I dont see how the argument of "life's not fair" is any help here or in any other thread in QT tbh! I tend to take a fairly dark view of people who come up with that line in arguments. Sorry.

[DaBeeeenster]

BTW Slick, do you have a maggie thatcher shrine in the corner of your house somewhere

Soz, couldnt resist. Sometimes economics needs a little light hearted sledging

[Slick]

Could you explain to me how profits of £7bn are in any way demonstrating efficiencies in the market? Surely they are demonstrating ineffeciencies in the market?

Well firstly they're demonstrating that its a very efficient business. They're probably not demonstrating the market is efficient but I believe it would be less efficient than it is allready if capping profits was introduced. Also this is a sign that there are high profits to be made in the market, so other firms might move into the market for the profit and make the market more efficient. This probably won't happen though due to the huge sunk costs involved with banking. It will encourage the competition to increase their market share though.

I dont see how the argument of "life's not fair" is any help here or in any other thread in QT tbh!

I said that because the only reason I can see for capping profits is jealousy that you're not getting the money yourself.