HSBC profits surge on strong UK recovery

HSBC has recorded its best performance since the pandemic began as the UK’s vaccine rollout boosted optimism.

The lender raked in pre-tax profits of £ 4.2bn in the first three months of 2021, up 79pc on the same time last year, as it started to release some of the money it set aside to cover bad loans.

HSBC decided it no longer needed £313m of the £4.4bn it had stowed away, as it expects fewer customers to default on their debt. Most of this – £216m – came from HSBC’s UK bank, after chief executive Noel Quinn ( pictured) said vaccination efforts had ‘created the foundation stone for a strong economic recovery’. Quinn added: ‘I think we should acknowledge the very strong support the UK Government gave customers and businesses over the past 12 months. That has definitely protected the UK economy from some of the significant downside risks that could have emerged. ‘The fact that the vaccine programme is rolling out at pace in the first quarter has really given us the confidence that the UK economy has the potential to rebound.’ However, he was cautious about customers who were due to come off government support such as furlough, and those who had taken out business loans which will soon start charging interest.

And chief financial officer Ewen Stevenson said the bank was wary of new vaccineresistant strains of Covid-19.

HSBC’s performance was also driven by its booming investment bank division, and the increasing focus on providing wealth management services to well-off customers in Asia.

The pandemic hit just as the Londonbased lender was embarking on an ambitious improvement plan.

HSBC is trying to sell operations in France, minimise its presence in the US and ramp up expansion in Asia, where the lender was founded in 1865 by Scottish trader Thomas Sutherland.

In the UK, HSBC recently announced it would close 82 branches this year, leaving it with 511. It plans to axe around 35,000 jobs around the world, and slash office space by 40pc as staff work from home.

Quinn said that London would bear more of the office cuts than Hong Kong. The bank has already planned to turn the entire executive floor of its Canary Wharf headquarters into meeting rooms.

But Quinn denied that the bank was looking to give up its London HQ entirely, as he said the city is ‘still a good place to have a head office for a global international bank’.

HSBC has angered British politicians in recent months due to its perceived deference to China’s authoritarian regime.