HSBA Hsbc Holdings Plc

By Simon Clark and Quentin Webb 

Global banking giant HSBC Holdings PLC said quarterly net profit more than doubled, as a nascent economic recovery allowed it to free up funds previously set aside to offset potential pandemic-related losses.

The London-based lender, which makes most of its profit in Hong Kong and mainland China, earned a forecast-beating $3.88 billion in the first three months of the year, up from $1.79 billion in the same period last year.

"The economic outlook has improved, giving us increasing confidence in our revenue growth plans," the bank said Tuesday. The lender's global banking and markets business had a good quarter, HSBC said, while growth was solid in areas like wealth management and trade finance in Asia, and in U.K. and Hong Kong mortgages.

HSBC reduced provisions for bad loans by $435 million in the quarter, which it said was mostly due to a brighter economic outlook. It had taken more than $3 billion of new provisions in the same period last year.

The bank said lower provisions in the U.K., in particular, had helped boost its results. This time last year, it also took a big one-off charge tied to a corporate borrower in Singapore.

Both net profit and provisions beat analysts' forecasts. On average, they had expected HSBC would report $1.88 billion of net income for the quarter and that it would make about $1.08 billion of new provisions, according to data compiled by HSBC.

In Hong Kong, the bank's stock jumped in early afternoon trading to stand 2.1% higher at 46.05 Hong Kong dollars a share.

HSBC Chief Executive Noel Quinn is one year into overhauling the bank to refocus its operations on Asia. In February, he said he was considering selling the unprofitable U.S. retail operations and pouring about $6 billion of investment into Asia in the next five years. HSBC is also in talks to sell its unprofitable French retail bank.

Geopolitical tensions between China and the West have strained Mr. Quinn's ambitions. Last year, HSBC supported China's imposition of a national-security law in Hong Kong, which the U.S. and British governments opposed.

Mr. Quinn has ruled out moving HSBC's headquarters back to Hong Kong, where the bank was founded in 1865. But he told staff this month that executives in charge of commercial lending, banking and markets, wealth and personal banking, and asset management would relocate to Hong Kong from London this year.

Pretax profit from HSBC's Hong Kong and mainland China operations fell 18% to $2.86 billion in the first quarter. The bank reported a $484 million pretax profit in North America.

HSBC cut its forecast for full-year loan-loss charges this year. But it warned: "there remains a high degree of uncertainty as countries emerge from the pandemic at different speeds and as government support measures unwind."

Write to Simon Clark at simon.clark@wsj.com and Quentin Webb at quentin.webb@wsj.com

(END) Dow Jones Newswires

April 27, 2021 02:34 ET (06:34 GMT)

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