HSBC profit boost but no dividend increase

HSBC HOLDINGS reported a better than expected first-quarter profit and capital position on Thursday, benefiting from an improved performance from its core operations and the return of cash from its US unit.

The bank’s common equity tier 1 ratio – a key measure of its financial strength – was 14.3 per cent at the end of the March quarter, up from 11.9 per cent in the same period last year and better than the 13.7 per cent expected by analysts.

HSBC is still Europe’s biggest bank despite slimming down in recent years. Along with US rivals such as JPMorgan and Citi it remains one of a handful of players to offer retail and investment banking services across the globe.

HSBC chief financial officer Iain Mackay ruled out a fresh share buyback in the short term as a means of using some of its excess capital, after the bank said it completed a previously announced $1bn (£775.4m) share buy-back in April.

“We’ve just finished one, we need to catch our breath a little bit,” Mr Mackay said yesterday.

Mr Mackay also reiterated the bank’s stance that it will hold its dividend steady for now, quashing shareholders’ hopes that the lender’s robust capital levels would see it boost payouts.

HSBC is expected to receive a further capital boost as it repatriates some $8bn currently stuck in its US subsidiary, following approval by the Federal Reserve last year of its plans to begin the process.