HSBC has beaten analyst expectations for its first quarter numbers as strong trading, rising interest rates and a weaker dollar lifted earnings in a welcome development for the bank struggling to get out from under a heavy miss at the end of last year.
Pre-tax profits, adjusted for one-offs and currency moves, reached $5.9bn, outpacing consensus forecasts of $5.3bn. Reported pre-tax earnings reached $4.96bn. The gap was largely the result of a change in how the bank accounts for changes in the fair value of its own debt.
Revenues of $12.9bn were up 40 per cent from $8.98bn in the final quarter of last year. Earnings per share of 16 cents beat expectations of 13 cents.
“This is a good set of results. The increase in adjusted profit was driven by strong performances in three of our four global businesses,” said Stuart Gulliver, chief executive.
HSBC has missed a string of financial targets and is in the process of a hefty restructuring after its return on equity fell to less than 1 per cent last year.
It has offset the disappointment among investors with its performance by buying back $3.5bn of shares and analysts are hoping it will announce plans for more this year.
In spite of the buybacks, the bank is one of the worst-performing among its European peers this year, down 1.8 per cent. In February, its full-year earnings miss sparked a 6.5 per cent share price fall, wiping almost £10bn off its market capitalisation and giving the bank its worst day in at least five years.
Its London shares closed on Wednesday at 645p, roughly in line with analysts’ 12-month target price. Its Hong Kong shares were up 0.5 per cent on Thursday at HK$64.8 — a 4 per cent gain for the year.
In March the bank signalled progress on its succession plan, announcing Mark Tucker, chief executive of AIA, the Asian insurer, as its new chairman. The appointment was the first time the bank has gone outside its own ranks to fill the position in more than 150 years of its existence.
One of Mr Tucker’s top priorities will be to find a replacement for Mr Gulliver, who has told the HSBC board he will quit as chief executive next year.