HSBC Holdings PLC yesterday posted its best quarter since the COVID-19 pandemic began as an improving economic outlook drove optimism about the ability of borrowers to repay loans and its strategic reset to Asia remained on track.
First-quarter profit more than doubled as US$400 million of loan loss reserves were released, spurred by the rollout of vaccination programs in markets such as the UK.
Europe’s largest bank said that its increasing focus on servicing wealthy Asians had also got off to a strong start.
Photo: Reuters
Adjusted pretax profit of US$6.4 billion for the three months to the end of last month comfortably beat analysts’ forecasts.
The firm’s investment bank joined rivals in benefiting from active markets, as a 55 percent surge in equity trading helped lift the division’s revenue.
“The economic outlook has improved, although uncertainties remain,” HSBC chief executive officer Noel Quinn said in a statement. “We carry good momentum into the second quarter.”
Easing credit losses helped it turn around its UK business and it also posted a profit in the US even as it embarks on shifting billions of dollars to Asia.
Weighed down by low interest rates, HSBC is seeking out more fee-based income, targeting to become a leader in wealth management in an increasingly affluent Asia.
Asia continued to be its biggest profit center, but earnings there were relatively unchanged from a year earlier. It saw big jumps in profit at all of its major divisions.
With the virus restrictions easing in major markets, HSBC was boosted by the reversal in credit losses. This year, such losses are now seen below the medium-term range of 30 to 40 basis points of average loans it indicated at its latest annual results, the lender said.
However, Quinn said that the bank was watching closely developments in India, which has seen an upsurge in infections.
“We have to see how the pandemic develops in India, and we are watching very closely,” he said.
The bank said that it is continuing negotiations on a potential sale of its retail operations in France.
In the US, it is exploring “both organic and inorganic options for our retail banking franchise,” it said.
While attention has focused on the businesses it is attempting to sell, HSBC chief financial officer Ewen Stevenson said that the bank was looking at possible acquisitions, mainly focused on its Asian wealth business, which is at the heart of its strategic repositioning.
Asked about Citigroup Inc’s sales of parts of its Asian business, Stevenson said “very few of them” would be a good fit for HSBC.
“We are looking at other options in the region, predominantly in the wealth space,” Stevenson said in a Bloomberg Television interview.
HSBC has also spent the past year adapting its working practices as a result of the pandemic.
Quinn this month said that he would turn the entire executive floor of the bank’s London headquarters into meeting rooms and it eventually aims to cut its office space by about 40 percent.
It aims to cut its global office footprint by about 20 percent this year, HSBC said.
The US government on Wednesday sanctioned more than two dozen companies in China, Turkey and the United Arab Emirates, including offshoots of a US chip firm, accusing the businesses of providing illicit support to Iran’s military or proxies. The US Department of Commerce included two subsidiaries of US-based chip distributor Arrow Electronics Inc (艾睿電子) on its so-called entity list published on the federal register for facilitating purchases by Iran’s proxies of US tech. Arrow spokesman John Hourigan said that the subsidiaries have been operating in full compliance with US export control regulations and his company is discussing with the US Bureau of
Taiwan’s foreign exchange reserves hit a record high at the end of last month, surpassing the US$600 billion mark for the first time, the central bank said yesterday. Last month, the country’s foreign exchange reserves rose US$5.51 billion from a month earlier to reach US$602.94 billion due to an increase in returns from the central bank’s portfolio management, the movement of other foreign currencies in the portfolio against the US dollar and the bank’s efforts to smooth the volatility of the New Taiwan dollar. Department of Foreign Exchange Director-General Eugene Tsai (蔡炯民)said a rate cut cycle launched by the US Federal Reserve
Taiwan’s rapidly aging population is fueling a sharp increase in homes occupied solely by elderly people, a trend that is reshaping the nation’s housing market and social fabric, real-estate brokers said yesterday. About 850,000 residences were occupied by elderly people in the first quarter, including 655,000 that housed only one resident, the Ministry of the Interior said. The figures have nearly doubled from a decade earlier, Great Home Realty Co (大家房屋) said, as people aged 65 and older now make up 20.8 percent of the population. “The so-called silver tsunami represents more than just a demographic shift — it could fundamentally redefine the
Businesses across the global semiconductor supply chain are bracing themselves for disruptions from an escalating trade war, after China imposed curbs on rare earth mineral exports and the US responded with additional tariffs and restrictions on software sales to the Asian nation. China’s restrictions, the most targeted move yet to limit supplies of rare earth materials, represent the first major attempt by Beijing to exercise long-arm jurisdiction over foreign companies to target the semiconductor industry, threatening to stall the chips powering the artificial intelligence (AI) boom. They prompted US President Donald Trump on Friday to announce that he would impose an additional
RSS