HSBC’s profits increase 79% due to Covid’s economic recovery

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HSBC said its first-quarter net profit rose 79% as reserves for bad loans were reduced and the improved economic outlook for more than a year over the coronavirus pandemic helped offset the success of low-interest income.

Net profit before tax was $ 5.8 billion in the three months to March 30, the bank said on Tuesday, significantly higher than the $ 3.3 billion forecast by analysts. Revenue fell 5% to $ 13 billion, slightly above expectations of $ 12.6 billion.

“The economic outlook has improved, although uncertainties remain,” said Noel Quinn, chief executive. “We maintained a good momentum until the second quarter, maintaining a conservative position on capital, financing, liquidity and credit.”

Reserves for projected credit losses also continued to fall from their highs in 2020. The bank released $ 400 million in provisions it charged for bad debts accumulated during the pandemic. It had set aside $ 3 billion the first quarter of last year.

A $ 600 million loan loss provision related to the bank’s exposure to Hin Leong, a Singapore oil trader at the center of a accounting scandal, also weighed on the previous period.

The reversal of credit losses helped turn around the performance of the British bank HSBC, which reported first-quarter profits of more than $ 1 billion, compared to $ 369 million in the same period last year .

Shares of HSBC rose to 2.8% in Hong Kong trading on Tuesday afternoon following the release of the results.

HSBC is in the middle of a program to redistribute $ 100 billion in risk-weighted assets to low-performing companies in Europe and the United States in Asia, especially in wealth and asset management. It has also pledged to reduce annual costs by $ 5.5 billion cut 35,000 jobs as low interest rates reduced billions of dollars a year in revenue.

HSBC said it was continuing negotiations for sale of its French retail banking division to the private equity group Cerberus, although no decision had yet been made.

While the bank has become a political boxing sack in the US-China trade war faced questions on his future amid Beijing’s crackdown on Hong Kong, Quinn told the Financial Times last week that he would in “flip flops” in strategy whenever there was a burst of tension.

The bank’s first-quarter profit fell in the middle of last year after the bank multiplied its reserves for bad loans by five, as the pandemic forced unprecedented global blockades, boosting the fear about the stability of the financial system.

Although the outlook had brightened by the end of 2020, HSBC’s pre-tax profit for the full year was still maintained. fell 45 percent.

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