HSBC Holdings PLC’s net profit fell by a fifth in the first quarter as it was hit by “extreme levels” of volatility in world markets in January and February, with bad loan costs almost doubling, it said.
However, HSBC chief executive officr Stuart Gulliver said: “Our first quarter performance was resilient in tough market conditions that affected the entire banking sector.”
The first two months of the year saw “reduced client activity” in foreign exchange and stocks, with a partial recovery in March, the bank said in its report.
In a statement to the Hong Kong stock exchange the banking giant said net profit fell 18 percent to US$4.3 billion while revenues were down 4 percent at US$13.91 billion.
Charges for bad loans surged US$692 million to US$1.16 billion year-on-year, related to the oil and gas, and metals and mining sectors, Gulliver added, although he described the rise as “anticipated.”
However, pre-tax profits were down 14 percent at US$6.1 billion beating its own estimates, and bank chiefs said it was on track to reach cost targets after a radical overhaul announced last year.
Gulliver said in the statement that cost-saving programs had reduced operating expenses.
“We are confident of hitting our cost target by the end of 2017,” he said.
Separately, Swiss banking giant UBS Group AG yesterday said that it is being squeezed by low interest rates, a strong Swiss franc and jittery investors staying out of the markets, warning that the underlying risks are unlikely to be resolved in the foreseeable future.
UBS issued the warning as it reported that its net profit tumbled 64 percent from a year earlier to 707 million Swiss francs (US$747.16 million) in the first quarter.
Income slumped 22 percent to 6.8 billion Swiss francs in the same period.
A negative financial market, “substantial volatility,” and underlying economic and political uncertainty had frightened away investors, leading to “abnormally low” trading volumes in the first quarter, UBS said in a statement.
Although some factors had stabilized, the underlying economic and political risks were still scaring away investors, the bank said, adding that they are unlikely to resolved in the “foreseeable future.”
Meanwhile, France’s BNP Paribas SA yesterday became the first European major bank to post a profit rise for the first quarter, delighting analysts and sending its shares sharply higher.
Net profit grew by over 10 percent year-on-year to 1.8 billion euros (US$2.09 billion) in the first quarter, thanks to one-off gains but also to improving credit risk, it said in a statement.
Even stripping out non-recurring gains, including from a downward revision of the company’s debt value, net profit was still up 4 percent, outperforming major European rivals Deutsche Bank AG, Banco Bilbao Vizcaya Argentaria SA or Barclays PLC.
“BNP Paribas reported this quarter good revenues resilience despite a particularly unfavourable environment: interest rates still low, stock market crisis, wait-and-see attitude by debt investors,” the bank said.
BNP Paribas also managed to beef up its capital adequacy ratios, reserves it must set aside against unforeseen risk.
TAKING STOCK: A Taiwanese cookware firm in Vietnam urged customers to assess inventory or place orders early so shipments can reach the US while tariffs are paused Taiwanese businesses in Vietnam are exploring alternatives after the White House imposed a 46 percent import duty on Vietnamese goods, following US President Donald Trump’s announcement of “reciprocal” tariffs on the US’ trading partners. Lo Shih-liang (羅世良), chairman of Brico Industry Co (裕茂工業), a Taiwanese company that manufactures cast iron cookware and stove components in Vietnam, said that more than 40 percent of his business was tied to the US market, describing the constant US policy shifts as an emotional roller coaster. “I work during the day and stay up all night watching the news. I’ve been following US news until 3am
UNCERTAINTY: Innolux activated a stringent supply chain management mechanism, as it did during the COVID-19 pandemic, to ensure optimal inventory levels for customers Flat-panel display makers AUO Corp (友達) and Innolux Corp (群創) yesterday said that about 12 to 20 percent of their display business is at risk of potential US tariffs and that they would relocate production or shipment destinations to mitigate the levies’ effects. US tariffs would have a direct impact of US$200 million on AUO’s revenue, company chairman Paul Peng (彭雙浪) told reporters on the sidelines of the Touch Taiwan trade show in Taipei yesterday. That would make up about 12 percent of the company’s overall revenue. To cope with the tariff uncertainty, AUO plans to allocate its production to manufacturing facilities in
Six years ago, LVMH’s billionaire CEO Bernard Arnault and US President Donald Trump cut the blue ribbon on a factory in rural Texas that would make designer handbags for Louis Vuitton, one of the world’s best-known luxury brands. However, since the high-profile opening, the factory has faced a host of problems limiting production, 11 former Louis Vuitton employees said. The site has consistently ranked among the worst-performing for Louis Vuitton globally, “significantly” underperforming other facilities, said three former Louis Vuitton workers and a senior industry source, who cited internal rankings shared with staff. The plant’s problems — which have not
COLLABORATION: Given Taiwan’s key position in global supply chains, the US firm is discussing strategies with local partners and clients to deal with global uncertainties Advanced Micro Devices Inc (AMD) yesterday said it is meeting with local ecosystem partners, including Taiwan Semiconductor Manufacturing Co (TSMC, 台積電), to discuss strategies, including long-term manufacturing, to navigate uncertainties such as US tariffs, as Taiwan occupies an important position in global supply chains. AMD chief executive officer Lisa Su (蘇姿丰) told reporters that Taiwan is an important part of the chip designer’s ecosystem and she is discussing with partners and customers in Taiwan to forge strong collaborations on different areas during this critical period. AMD has just become the first artificial-intelligence (AI) server chip customer of TSMC to utilize its advanced
RSS