HSBC Q1 profit slides as Ukraine battle, inflation bite

SINGAPORE/LONDON (REUTERS) – HSBC Holdings posted a 27 per cent drop in quarterly profit on Tuesday (April 26) and nixed the potential for extra buy-backs this yr.

It blamed rising inflation and financial uncertainty as a result of Russia-Ukraine battle for denting its prospects.

Europe’s largest financial institution posted a pre-tax profit of US$4.2 billion (S$5.8 billion) for the primary quarter ended March versus US$5.78 billion a yr earlier.

The outcomes, nevertheless, beat the US$3.72 billion common estimate of 16 analysts compiled by HSBC, which earns about two-thirds of its reported pre-tax profit from Asia.

The London-headquartered lender stated anticipated credit score losses (ECL) had been at US$600 million versus the year-ago quarter when it unlocked US$400 million of reserves as the outlook improved.

The elevated ECL primarily displays the direct and broader financial impacts of the Russia-Ukraine battle and inflationary pressures on the ahead financial outlook, it added.

“While profits were down on last year’s first quarter due to market impacts on wealth revenue and a more normalised level of ECL, higher lending across all businesses and regions, and good business growth in personal banking, insurance and trade finance bode well for future quarters,” HSBC chief govt Noel Quinn stated within the outcomes assertion.

The lender, nevertheless, dealt a blow to shareholders by saying additional buy-backs, which it has in recent times used as a way of returning extra capital to buyers, could be unlikely this yr. It blamed volatility within the worth of some investments it holds as hedges towards dips in curiosity earnings.

Rising vitality costs and provide chain disruptions, partly as a result of Russia-Ukraine battle, are additionally tempering the outlook for banks’ performances at a time when surging inflation and potential speedy charge hikes threaten to scupper a nascent world financial restoration from the pandemic.

HSBC’s London-listed shares have gained 12 per cent this yr, outperforming many British banks and the FTSE index.

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