HSBC first quarter profits jump as costs drop

HSBC has reported a 31% jump in pre-tax profits for the first quarter as it cut costs and incomes from Asia grew. Europe’s largest bank made $6.2bn (£4.8bn) before tax in the three months to March, up from $4.8bn in the same period a year earlier.

It beat the $5.58bn average of analysts’ estimates compiled by HSBC. Chief executive John Flint said the results were ‘encouraging’ against a backdrop of global economic uncertainty.

Shares closed more than 2% higher in Hong Kong trading after the earnings release.

In London, the bank’s shares added 2.7% in Friday morning trading. In a statement, HSBC said growth in Asia was strong during the first quarter and reported a 7% rise in revenue for the period, compared with a year earlier.

The bank makes three-quarters of its profits in Asia.

The earnings release also showed HSBC had made progress in efforts to cut costs, with operating expenses down 12% during the first quarter. Earnings per share rose 40% to 21 cents.

HSBC has moved to rein in spending while trying to boost investment in retail banking and wealth management.

“These are an encouraging set of results, particularly in the context of heightened economic uncertainty globally,” said Mr Flint.

The bank’s US business continued to disappoint, but saw a return to profit, bringing in $379m, compared with a pre-tax loss of $596m in the first three months of 2018.

The bank said its “US turnaround” was progressing, but remained its “most challenging strategic priority”. Earlier this year, HSBC warned profits would be hit by a slowdown in China.

In 2018, the lender said it would invest up to $17bn over three years in areas including in China and technology, without affecting profitability.