HSBC unveils big profits

Europe’s biggest bank HSBC unveiled big first-quarter profits yesterday, helped by growth in emerging markets and higher income from its investment banking division.

HSBC said underlying pre-tax profits jumped by 25 per cent to $6.8 billion (€5.2 billion) in the three months to March 31 compared with the outcome for the first quarter of 2011.

Net profits hit $2.58 billion, down 38 per cent on revaluation of its debt.

“We have had a good start to the year,” HSBC chief executive Stuart Gulliver said in the bank’s earnings statement.

“Underlying profit before tax increased by $1.4 billion, driven by increased revenues.”

In reaction, HSBC shares rose 0.97 per cent to stand at 560.5 pence in morning deals on London’s benchmark FTSE 100 index, which was down 0.27 percent at 5,640.19 points.

Mr Gulliver added that markets remained “volatile with high levels of debt and regulatory and political uncertainty in deve-loped economies, contrasting with an encouraging outlook in markets that are growing faster.”

The bank said that revenue in the first quarter had jumped 16 per cent in Hong Kong and 18 per cent in the rest of the Asia-Pacific region.

Mr Gulliver added: “Our performance in April has been satisfactory, and we remain confident that we will deliver on executing our strategy.”

Founded in Hong Kong and Shanghai in 1865, HSBC is in the process of reducing the bank’s global workforce by 30,000 over two years to 2013.

Last month it said it would cut 3,167 jobs in Britain as part of the plans to save up to $3.5 billion. HSBC said yesterday that it had set aside a further sum of $468 million to compensate clients who were mis-sold insurance products in Britain.

Last year, Britain’s banks lost a high court appeal against tighter regulation of PPI, which provides insurance for consumers if they fail to meet repayments on a credit product such as loans, mortgages or credit cards.

PPI became controversial after it was revealed that many consumers had been sold the insurance without understanding that the cost was being added to their loan repayments.

HSBC added yesterday that its bad debt charges in the United States dropped by $500 million in the first quarter from the equivalent period in 2011.

The bank last year sold its US credit card and retail services business to Capital One Financial Corp. in a deal worth $32.7 billion, as it sought to focus on building its business in the East.

HSBC also revealed that its core tier one ratio, or buffer against future financial crises, stood at 10.4 per cent at the end of March, above the nine per cent level set by the EU’s banking regulator.