Quinn hails HSBC strategy as Q1 profits surge
HSBC has seen a sharp rise in profits
HSBC chief executive Noel Quinn declared that its “strategy is working” after announcing a surge in profits and its first dividend since before the pandemic.
Pre-tax profits smashed expectations by rising 200% to $12.9bn (£10.3bn) from $8.7bn as revenue soared by 64% to $20.2bn.
The bank benefited from interest rate rises around the world, lower restructuring costs and an increase in both trading and dealmaking fees during the period.
It declared a dividend of 10 cents per share, its first since 2019, as well as a share buy-back of up to $2bn (£1.6bn).
Mr Quinn said: “Our strong first quarter performance provides further evidence that our strategy is working.
“Our profits were spread across out major geographies and all three global business performed well as we continued to meet our customers’ needs through our internationally connected franchises.
“With the good momentum we have in our business, we expect to have substantial future distribution capacity for dividends and share buy-backs.”
The results included a provisional gain of $1.5bn on the acquisition of Silicon Valley Bank in March.
“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,” said Mr Quinn.
Its capital markets and advisory business brought in $306m in fees during the period an increase of 11% compared with a year earlier. Most of HSBC’s rivals posted declines of at least 20% within their dealmaking units in the first quarter and executives have struck a pessimistic tone about a recovery this year.
HSBC has been engaged in an ongoing tussle with its biggest shareholder, insurance firm Ping An, about spinning out its Asian business into a separate unit, which it argues would bolster returns.
Wall Street lower on First Republic deal
Wall Street stocks closed lower as markets digested the takeover of the struggling First Republic Bank, and ahead of a key Federal Reserve decision on interest rates on Wednesday.
US financial authorities announced the seizure of First Republic on Monday and that it had been sold to JPMorgan Chase, making it the second biggest bank by assets to collapse in US history.
All three major US indices finished in the red.
However, Edward Moya of the OANDA trading platform, said: “It is looking like the stress for the smaller banks is over as we now have a playbook to help the next bank that runs into trouble.”
The acquisition of First Republic follows the collapse in March of three midsized lenders, including the high-profile failures of Silicon Valley Bank (SVB) and Signature Bank – which rattled markets and raised concerns over possible contagion across the sector.
But Jack Ablin, chief investment officer at Cresset, added that the latest deal would go “a long way to calm investors’ concerns” on turmoil in the sector.