Pedestrians wearing protective masks walk past a logo displayed at a branch of HSBC bank in the central district of Hong Kong.
Roy Liu | Bloomberg | Getty Images
HSBC, Europe’s largest lender by assets, reported first quarter pre-tax profits higher than estimates, but recorded lower revenues.
The London-based bank, which makes most of its revenue in Asia, said its reported profit before tax rose 79% from a year ago to $ 5.8 billion for the three months se ending March 31. It exceeded analysts’ expectations by $ 3.346 billion, according to estimates compiled by HSBC.
Reported revenue was nearly $ 13 billion, down 5% for the first quarter from the same period a year ago. The bank said this reflected the low rate environment.
“We have had a good start to the year supporting our clients, while achieving significantly improved returns for our shareholders,” Noel Quinn, Managing Director of HSBC Group, said in a statement. “I am satisfied with our sales and costs, but in particular our significantly lower expected credit losses.”
“We made further progress in reducing costs and risk-weighted assets, and launched new products and capabilities in areas of strength,” added Quinn.
HSBC said all regions were profitable in the first quarter.
Here are other highlights from the bank’s financial bulletin:
- Expected credit losses and other charges for credit impairment declined for the quarter – the bank released $ 400 million in bad debt provisions against a charge of $ 3 billion a year ago, reflecting improving performance. economic outlook, said HSBC.
- The net interest margin – a measure of loan profitability – stood at 1.21%, down 33 basis points from a year ago.
- The common equity Tier 1 capital ratio was 15.9%, unchanged from December 31, 2020.
- Basic earnings per share was $ 0.19, up from $ 0.03 in the previous quarter and $ 0.09 a year ago.
HSBC said the economic outlook has improved and its expected credit loss charge for 2021 will be “below the mid-term range of 30bp to 40bp for average lending,” as reported in its 2020 annual results.
He also expects “single-digit” percentage growth in consumer loans for the year, depending on how quickly countries can recover from the coronavirus pandemic, and given the length of time government support measures.
The bank said in February that it would not pay quarterly dividends in 2021, but would consider an interim payment to its August half-year results. From 2022, the bank will aim for a payout ratio of between 40% and 55% of reported earnings per share, she said when the results were last released.
Hong Kong-listed HSBC shares rose 0.44% before the results were released.