HSBC does the business with solid Q1 outcome

HSBC's results are a reminder of how little it pays its traders

HSBC's results are a reminder of how little it pays its traders

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Banking giant HSBC Holdings PLC yesterday said that pretax profit jumped 30.7 percent to US$6.2 billion in the first three months of the year, describing the results as "encouraging", despite an uncertain global outlook.

Reported pretax profit for the bank's Asia operations rose 5 per cent during the first quarter to $5 billion, with the region accounting for 81 per cent of the bank's overall profits.

Revenue rose five per cent, benefiting from positive market impacts and gains made from various disposals. The CEO berated his most senior managers in March for missing cost targets, people with knowledge of the matter have said.

HSBC beat forecasts with a 31% rise in first quarter profit, with its Retail Banking and Wealth Management unit reporting adjusted pre-tax profit of $2.23bn, up 19% from $1.87bn in the first quarter of 2018.

HSBC recorded profit after tax $4.9 billion and brought its operating expenses down by 12%, with the reduction in outgoings helping the bank to return to "positive adjusted jaws" of 6% in Q1.

The Asia-centric bank had failed to live up to its pledge to produce positive jaws a year ago. Since Flint took over in February of a year ago, the shares are down about 10 percent.

However, despite US turnaround progressing, it remains the most challenging strategic priority for the group, it said.

HSBC said operating expenses dropped 12 percent in the January-March quarter, helped by one-off sales in its retail and commercial businesses and the non-recurrence of USA regulatory fines for past misdeeds. "We would expect to get some out this year", Stevenson said on a call with reporters.

The results were HSBC's biggest reported profit in 14 quarters, Stevenson said in an earlier interview with Bloomberg Television.

HSBC's investment banking business had a poor first quarter, in common with many of its United States and European rivals that saw trading revenues fall as subdued markets kept clients from trading.

"There is much to like about HSBC, particularly in the context of a demanding United Kingdom outlook", said analysts at Keefe, Bruyette & Woods.

"We have made a good start to 2019", Flint, who took the helm in February past year, said in a filing with Hong Kong's stock exchange announcing the results. Markets revenues were down 5 percent, largely as a result of poorer performances in its credit and equities businesses.