HSBC said first quarter net profits rose 79% as bad debt reserves declined and improving economic outlook more than a year after the start of the coronavirus pandemic helped offset the fallout on income from low interest rates.
Net profit before tax was $ 5.8 billion in the three months to March 30, the bank said on Tuesday, significantly higher than the $ 3.3 billion forecast by analysts. Revenue fell 5% to $ 13 billion, slightly above expectations of $ 12.6 billion.
“The economic outlook has improved, although uncertainties remain,” said Managing Director Noel Quinn. “We are maintaining good momentum in the second quarter, while maintaining cautious positions in capital, financing, liquidity and credit.”
Reserves for expected credit losses also continued to decline from their 2020 highs. The bank freed up $ 400 million in provisions it set up for bad debts accumulated during the pandemic. He had set aside $ 3 billion in the first quarter of last year.
A $ 600 million loan loss allowance related to the bank’s exposure to Hin Leong, a Singapore oil trader in the center of an accounting scandal, also weighed on the previous period.
The reversal of credit losses helped reverse the performance of its UK bank, which reported first quarter profits of just over $ 1 billion, up from $ 369 million in the same period last year.
HSBC shares rose 2.8% in trading in Hong Kong on Tuesday afternoon after the results were released.
HSBC is in the midst of a program to redeploy $ 100 billion of risk-weighted assets from underperforming companies in Europe and the United States to Asia, particularly in wealth management and of assets. He also pledged to cut $ 5.5 billion in annual costs and cut 35,000 jobs as extremely low interest rates reduce income by billions of dollars a year.
HSBC said on Tuesday it was continuing negotiations on sale from its French retail banking division to private equity group Cerberus, although no decision has yet been made.
As the bank has become a political punch bag in the US-China trade war and the future of Hong Kong, Quinn recently told the Financial Times he would. not “flip-flop” on strategy whenever there was a surge of tension.
Profit for the first quarter half dipped Last year, the bank increased its bad debt reserves fivefold as the pandemic forced unprecedented global lockdowns, sparking fears about the stability of the financial system.
As the outlook brightened at the end of 2020, HSBC’s full-year pre-tax profit fell 45 percent.