Advertisement

HSBC's profits soar in first quarter as bank cuts costs

HSBC reported a 95 per cent increase in pre-tax profits in the first quarter as the bank slashed costs and bad debts.

HSBC reported a 95 per cent increase in pre-tax profits in the first quarter as the bank slashed costs and bad debts.

Profit before tax for the three months to March 31st came to $8.4bn, up from the previous year's $4.3bn, as revenue rose by 14% to $18.4bn from $16.2bn.

Advertisement - Article continues below

The company reduced operating expenses by 10% to $9.3bn from $10.3bn and cut loan impairment charges and other credit risk provisions by 51% to $1.1bn from $2.3bn.

The fall in costs come on the back of the company's three-year restructuring that is nearly complete.

"While continuing uncertainty in the global economy has created a relatively muted environment for revenue growth, we have increased revenue in key areas including residential mortgages and commercial Banking in both our home markets of Hong Kong and the UK, and in our Financing and Equity Capital Markets business," said Chief Executive, Stuart Gulliver.

"Loan impairment charges were lower in every region, notably in North America. Our continued focus on cost management contributed to an improvement in our underlying cost efficiency ratio."

Gulliver has already slashed $3.5bn in annual expenses and cut 38,000 jobs. He has made 52 deals to shed businesses that deliver low profits or lack scale but is struggling to get costs to below a target of 52% of income.

Advertisement - Article continues below

HSBC increased its capital, with its core tier 1 ratio up to 12.7% from 12.3%.

Gulliver said the bank's performance in April continued the trend it saw in the first quarter. He expects challenges ahead given the poor macroeconomic outlook.

"However, we expect the mainland Chinese economy to accelerate after a slower than expected start to the year; the US to continue to outperform its peers, although the pace of growth is slow compared to past standards; the Eurozone to contract; emerging markets to grow at around 5.0% and global growth to be around 2.0% for 2013," he added.

"We have strengthened our capital position and remain one of the best-capitalised banks in the world, allowing us both to invest in organic growth and grow dividends. Our strategic direction remains unchanged. Later this month we will update investors on the next phase of its implementation."

Shares rose 3.07% to 735.70p at 10:09 Tuesday.

RD

Advertisement
Advertisement

Recommended

Visit/investments/investment-strategy/601044/broker-safety-your-questions-answered
Investment strategy

Broker safety – your questions answered

Cris Sholto Heaton answers more of your questions about the safety of stockbroker accounts
25 Mar 2020
Visit/investments/investment-strategy/600861/how-demographics-affects-stock-valuations
Investment strategy

How demographics affects stock valuations

New research suggests that stock and bond valuations are driven by the age of the population – at least in the US.
24 Feb 2020
Visit/investments/stocks-and-shares/600863/sirius-minerals-anglo-american-takeover
Stocks and shares

Do you own shares in Sirius Minerals? Here’s what you need to do now

Mining giant Anglo American has proposed a cash takeover of Yorkshire-based minnow Sirius Minerals. Unhappy shareholders must decide whether to accept…
20 Feb 2020
Visit/investments/stockmarkets/600634/why-investors-should-be-cautiously-bullish-for-2020
Stockmarkets

Why investors should be “cautiously bullish” for 2020

Analysts have been out in force making rosy predictions for stockmarkets in 2020, but while there is certainly a case for optimism, investors should r…
17 Jan 2020

Most Popular

Visit/economy/inflation/601584/the-end-of-the-bond-bull-market-and-the-return-of-inflation
Inflation

The end of the bond bull market and the return of inflation

Central bank stimulus, surging post-lockdown demand and the end of the 40-year bond bull market. It all points to inflation, says John Stepek. Here’s …
30 Jun 2020
Visit/investments/commodities/gold/601587/bullish-gold-price-cup-and-handle-chart-pattern
Gold

This chart pattern could be extraordinarily bullish for gold

The mother of all patterns is developing in the gold charts, says Dominic Frisby. And if everything plays out well, gold could hit a price that invest…
1 Jul 2020
Visit/investments/property/601606/house-prices-crash-uk-property-prices-falling-where-next
Property

House price crash: UK property prices are falling – so where next?

With UK property prices falling for the first time in eight years, are we about to see a house price crash? John Stepek looks at what’s behind the sli…
2 Jul 2020