HSBC, Europe’s largest lender, on Tuesday reported first-quarter pre-tax profits of $9.4 billion, lower than analysts expected on higher expected credit losses and other impairment charges.
HSBC’s revenue rose 6% year-on-year, beating expectations, due to higher wealth fees and other income.
Below is a comparison of HSBC’s first quarter results and the bank’s consensus forecasts.
Pre-tax profit: $9.37 billion vs. $9.59 billion Revenue: $18.62 billion vs. $18.49 billion
The company’s pretax profit for the first quarter was $9.4 billion, down from $9.5 billion a year earlier.
HSBC said expected credit losses were $1.3 billion, an increase of $0.4 billion compared to the same period last year, related to exposure to UK financial sponsors and provisions due to increased uncertainty from the Middle East conflict and a deteriorating economic outlook.
But the bank said it expects to realize annual cost savings of $1.5 billion by the end of June 2026. “Through the privatization of Hang Seng Bank, we expect to realize $500 million in pre-tax revenue and cost synergies across both brands in Hong Kong by the end of 2028.”
HSBC completed the privatization of Hang Seng Bank on January 26, and Hang Seng Bank’s shares were subsequently delisted from the Hong Kong Stock Exchange.
The lender highlighted risks from the Middle East conflict, including high oil prices, accelerating inflation and a significant slowdown in GDP, warning that if these factors were to come into play, pre-tax profits could be negatively impacted by a “mid to high single-digit percentage”.
HSBC maintained its target for return on tangible equity (a measure of profitability) at 17%, but warned that RoTE excluding notable items could fall below 17% in 2026 if the fallout from the Middle East crisis materializes. Annualized RoTE for the reported quarter was 17.3%.
HSBC’s board also approved a first interim dividend of 10 cents per share in 2026.
Never miss the most trusted news moments in business news when you choose CNBC as your preferred source on Google.
Source link
