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HSBC Holdings declares $11bn Q1 profit

Noel Quinn, group chief executive of HSBC

Profits before tax more than tripled year-over-year in the first quarter of 2023, HSBC Holdings plc reported on Tuesday.

The parent company of the global banking giant said profit before tax rose by $8.7 billion to $12.9 billion.

This included a $2.1 billion reversal of an impairment relating to the planned sale of its retail banking operations in France, as the completion of the transaction has become less certain, and a provisional gain of $1.5 billion on the acquisition of Silicon Valley Bank UK Limited in March.

On a constant currency basis, profit before tax increased by $9 billion to $12.9 billion.

Profit after tax increased by $7.6 billion to $11 billion.

Revenue increased by 64 per cent to $20.2 billion. The increase was driven by higher net interest income in all of the company’s global businesses due to interest rate rises.

It also included the gains related to the transactions in France and Britain.

On a constant currency basis, revenue rose by 74 per cent to $20.2 billion.

Noel Quinn, group chief executive, said: “Our strong first-quarter performance provides further evidence that our strategy is working. 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.

“Our return on tangible equity was 19.3 per cent, excluding the impact of strategic transactions. As a result, we have announced our first quarterly dividend since 2019 of $0.10 per share, as well as a share buyback of up to $2 billion.

“With the good momentum we have in our business, we expect to have substantial future distribution capacity for dividends and share buybacks.”

He added: “We remain focused on continuing to improve our performance and maintaining tight cost discipline, but we also saw an opportunity to invest in SVB UK to accelerate our growth plans.

“For 158 years, HSBC has banked the entrepreneurs who have created today’s industrial base. With the SVB UK acquisition, we have access to more of the entrepreneurs in the technology and life sciences sectors who will create the businesses of tomorrow. We believe they‘re a natural fit for HSBC, and that we‘re uniquely placed to take them global.”

Operating expenses of $7.6 billion were $0.6 billion or seven per cent lower than in 1Q22.

Customer accounts increased by $34 billion in the quarter. On a constant currency basis, customer accounts increased by $21 billion, mainly as $23 billion of balances associated with the company’s retail banking operations in France were reclassified from held for sale during the period.

In addition, the acquisition of SVB UK resulted in growth of $8 billion.

Excluding these factors, deposits fell by $10 billion or 0.6 per cent, reflecting outflows in HSBC UK as customers utilised surplus deposits, as well as in commercial banking and global banking and markets in Hong Kong.

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Published May 03, 2023 at 7:35 am (Updated May 03, 2023 at 7:35 am)

HSBC Holdings declares $11bn Q1 profit

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