HSBC profits drop less than expected as bank announces share buyback of up to $3bn
HSBC ( HSBA.L ) posted a drop in pre-tax profits for the first quarter, but announced a share buyback programme of up to $3bn (£2.23bn).
In results released on Tuesday morning, the bank said profits before tax fell by $3.2bn to $9.5bn compared with the same period last year, though this was well ahead of expectations of $7.8bn, according to Reuters .
HSBC said the drop was primarily because of the net impact in the first quarter of last year of business disposals in Canada and Argentina. The bank said that contributors to profits in the latest quarter included strong performance in its wealth business, as well as in foreign exchange (forex), debt and equity markets.
Profits after tax were down $3.3bn to $7.6bn in the first three months of the bank's fiscal year.
Net interest income (NII) – the gap between what it pays out to savers and receives from borrowers in interest – fell by $0.4bn to $8.3bn. Revenue fell by $3.1bn, or 15%, year-on-year to $17.6bn.
HSBC said its board had approved a first interim dividend of $0.10 per share and planned to launch a share buyback of up to $3bn, which it expected to begin shortly after its annual general meeting on 2 May and complete before its interim results announcement.
In its outlook, HSBC said: "The macroeconomic environment is facing heightened uncertainty, in particular from protectionist trade policies, creating volatility in both economic forecasts and financial markets and adversely impacting consumer and business sentiment."
On the HSBC's earnings call on Tuesday, CEO Georges Elhedery said that in a "plausible downside tariff scenario, we estimate that there will be a low single-digit percentage impact on the group's revenues."
HSBC said operating expenses of $8.1bn were stable compared with the first quarter of 2024.
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The results come after Elhedery announced an overhaul of the bank's structure in October, shortly after taking the reins.
The restructure divided the bank into four businesses as of the start of the year: Hong Kong, UK, corporate and institutional banking, as well as international wealth and premier banking.
HSBC said this was aimed at reducing the "duplication of processes and decision making" in the business.
In its full-year results, HSBC said it aimed to generate around $300m of cost reductions in 2025, committing to an annualised reduction of $1.5bn in its cost base expected by the end of 2026.
Matt Britzman, senior equity analyst at Hargreaves Lansdown, said: "HSBC has kicked off the year with a bang, smashing past first-quarter expectations.
"The numbers are a bit noisy thanks to the sales of its Canadian and Argentinian businesses, which makes year-on-year comparisons a little tricky," he said. "But strip out the noise, and the underlying performance looks strong.
"For investors, this is exactly what they want to see: a core business holding up well just as the global outlook turns murky.
"HSBC’s global reach means it’s exposed if things get messy with ongoing trade tensions or a wider economic slowdown."
"But the positive news is that’s not what they’re expecting. The fact that full-year guidance is staying put after a strong quarter reflects the challenges ahead, but it’s also a solid vote of confidence from the top.
"Loan demand might stay sluggish, but with multiple income streams, HSBC isn’t leaning too hard on one part of the business. In a choppy environment, that kind of diversification is an asset."
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