HSBC has seen its first-quarter pre-tax profits drop 14 per cent after “extreme levels of volatility” at the beginning of the year.
The global bank posted a pre-tax profit of $6.1bn (£4.17bn) for the first three months of the year, down from $7.1bn (£4.8bn) at the same time in 2015.
Despite this, HSBC chief executive Stuart Gulliver said the first quarter performance was “resilient in tough market conditions”, pointing out profits had been very strong in the first quarter of 2015.
A trading update published today (3 May) revealed adjusted revenue reached $13.9bn (£9.4bn), down 4 per cent from a year ago.
In its full year results, the bank reported underlying profits dipped by 7 per cent in 2015, caused by higher costs and credit charges.
According to Mr Gulliver, market uncertainty had affected the bank’s ability to generate revenue in the markets and wealth management businesses, but its “universal-banking business model” helped to cushion the impact through growth in other divisions.
This growth came from commercial banking, which continued to see positive returns in spite of the slow-down in global trade. The Hong Kong and UK businesses saw revenue increase across its retail banking and wealth management sectors, and in its personal lending division in Asia and Mexico.
Mr Gulliver stated: “A combination of tight cost management and the increasing impact of our cost-saving programmes reduced operating expenses relative to the fourth quarter of 2015.”
A conference call will take place today with analysts and investors to discuss possible cost-cuts.
Tough market conditions have affected the entire banking sector, with Barclays posting an 8 per cent fall in profits for the first quarter of the year.
Graham Spooner, investment research analyst at The Share Centre, said investors should appreciate the dividend was not axed, as many analysts had feared, which he suggested was another sign the group’s results were not as bad as they could’ve been.
“Income seekers in the banking sector have been hit hard in recent years. HSBC has remained a significant payer and though progress may continue to be slow in the face of many challenges, the shares could be a better option than other banks.”
katherine.denham@ft.com
