LONDON/HONG KONG • HSBC Holdings, Europe's largest bank by assets, posted better-thanexpected results yesterday, with a first-quarter profit and capital position which boosted the lender's share price in Hong Kong as the bank seeks to move from restructuring to growth.
The bank's common equity tier 1 ratio - a key measure of its financial strength - was 14.3 per cent at the end of the March quarter, up from 11.9 per cent in the same period last year and better than the 13.7 per cent expected by analysts.
Adjusted revenue rose 2 per cent, compared with a 9 per cent drop forecast by analysts, driven by loan growth in Asia and the investment bank's performance, the lender said.
Trading revenue jumped 29 per cent, exceeding the average 9 per cent rise at nine of the largest global investment banks, data from Bloomberg Intelligence shows.
HSBC's shares rose 2 per cent in Hong Kong following the announcement, outperforming a 0.5 per cent drop in the Hang Seng index.
"Revenue growth was driven by a solid recovery in retail banking and wealth management and stronger markets, which addresses our earlier concerns about flattening top-line growth," Cenkos Securities analyst Sandy Chen said in a note to clients. "Is this first-quarter recovery a one-off? We do not think so."
HSBC chief executive Stuart Gulliver has exited almost 100 businesses and 18 countries - moves that have taken a toll on revenues - while enduring several costly misconduct scandals. The bank has recruited Mr Mark Tucker to succeed Mr Douglas Flint as chairman in October. Mr Gulliver retires next year.
The only major banks to post better quarterly trading gains were BNP Paribas and Morgan Stanley, which both recorded gains of over 30 per cent, company filings show.
HSBC shares gained 3.3 per cent to 666.3 pence yesterday morning in London, the biggest gain since December. Share repurchases have pushed its stock up more than 45 per cent in the past year, and some analysts had been hoping for an update on the prospect of further buybacks.
Even after better-than-forecast results, analysts say shareholders should be asking how the bank proposes to turn around five years of annual revenue declines.
Unless HSBC plans to take on the kinds of risks it did prior to the global financial crisis, there is not an awful lot it can do, Bloomberg Gadfly columnist Nisha Gopalan wrote.
Rising capital ratios make HSBC's generous dividends look more sustainable and could point to more buybacks ahead, said Reuters Breakingviews reporter Jun Yang.
However, Ms Gopalan wrote that unless HSBC gets more customers, both new and existing, coming in the door to borrow, it is hard to see its post-Brexit glow being sustained, she said.