- Q1 underlying revenue up 4%, to $19.1bn
- Underlying profit before tax flat at $10.1bn
- Full-year guidance nudged higher
Matt Britzman, senior equity analyst, Hargreaves Lansdown:
“HSBC’s first quarter was better than the headline numbers suggest. Revenue came in ahead of expectations once the noise from disposals is stripped out, helped by a strong showing in Wealth and solid fee income, while net interest income was broadly where the market expected. HSBC isn’t just leaning on higher rates, with customer activity and its Asian wealth franchise doing more of the heavy lifting. The upgrade to full-year net interest income guidance marries what we saw from peers last week, giving investors some comfort that the income engine still has fuel in the tank.
The problem was underlying top-line strength got eaten up before it reached the bottom line. Credit losses were heavier than expected, including a fraud-related charge in the UK and extra caution around the Middle East outlook, while costs also ran above consensus as performance pay, inflation and technology spend bit into profits. That left reported profit a touch light, even though underlying returns remained robust and capital landed exactly where expected. For investors, this was a typically messy quarter: the core franchise looks healthy, but HSBC still needs to prove it can keep a lid on costs and impairments if the market is going to give full credit for that stronger revenue base.”
