HSBC pre-tax profit in first quarter of this year triples to $12.9 billion

▶ Bank’s revenue jumps 64% to $20.2bn in the three months to the end of March

HSBC said its first-quarter profit before tax tripled as rising interest rates globally increased the net interest income of the biggest European lender.

Pre-tax income for the three months to the end of March, rose to about $12.9 billion, from $4.14 billion in the same period in 2022, HSBC said yesterday, beating analysts’ estimate of $8.64 billion.

First-quarter profit included a $2.1 billion reversal of an impairment relating to the planned sale of HSBC’s retail banking operations in France, as the completion of the transaction has become less certain.

Results also reflect a provisional gain of $1.5 billion on the acquisition of Silicon Valley Bank UK in March after the collapse of SVB in the US.

Revenue increased by 64 per cent to $20.2 billion, driven by higher net interest income in all of HSBC’s businesses because of interest rate rises. It also included the gains related to the transactions in France and the UK.

Net interest income increased 38 per cent to nearly $9 billion in the first quarter from the same period a year earlier.

Customer lending balances increased by $40 billion in the quarter and customer accounts increased by $34 billion.

HSBC said its board has approved a first interim dividend of $0.10 per share and the bank announced plans to carry out up to a $2 billion share buyback.

HSBC’s share price jumped 4 per cent at 11.19am UAE time, after the earnings announcement. The bank’s stock is up nearly 13 per cent since the start of the year.

“Our strong first-quarter performance provides further evidence that our strategy is working,” said group chief executive Noel Quinn. “Our profits were spread across our major geographies, and all three global businesses performed well as we continued to meet our customers’ needs through our internationally connected franchises.”

HSBC, which started a strategic shift to Asia several years ago, after scaling back its operations in the US and parts of Europe, is expected to benefit from the reopening of China’s economy this year.

“A stronger China will soften but not offset the hit of slower growth in the US and Europe, the fading boost of domestic reopening after the pandemic, and higher interest rates,” S&P Global Ratings said last month.

China’s economy is forecast to expand 5.5 per cent this year despite a global slowdown, while the output of the Asia-Pacific region is projected at 4.6 per cent, according to S&P estimates. The International Monetary Fund expects China to grow about by 5.2 per cent in 2023, while the global economy is forecast to expand 2.8 per cent.