A turnaround in its business in Europe and North America, fewer bad debts and cost-cutting helped HSBC post sharply higher first-quarter results yesterday.
After adjusting for debt, investments and disposals, pre-tax profit surged 95 per cent to US$8.4 billion. The average analyst forecast was US$8 billion.
Underlying pre-tax profit grew 34 per cent from a year earlier to US$7.6 billion.
HSBC stock rose as much as 3.39 per cent to 738.1 pence (HK$88.98) in London after the results announcement, following the market close in Hong Kong, where HSBC rose 0.17 per cent to HK$86.20.
Pre-tax profit in Europe and North America turned positive from a loss last year. Bad-loan charges worldwide fell 50 per cent.
Chief executive Stuart Gulliver said they improved in every region, especially North America. He said the industry was moving into "calmer waters".
This is reflected in increased revenue in key areas, including residential mortgages and commercial banking in HSBC's home markets, Hong Kong and Britain.
The bank made a smaller provision of US$164 million in the quarter for customer redress programmes in Britain, he said.
Return on equity rose to 14.9 per cent. The core tier 1 capital ratio grew 0.4 percentage points to 12.7 per cent since December.
Net profit for the first quarter surged 63.1 per cent from a year earlier to US$6.2 billion.
"We see these results as an endorsement of the strength of the franchise and its ability to generate earnings even in a sluggish macro environment," Chirantan Barua, an analyst at Bernstein, told Reuters.
Gulliver said the bank cut about 1,000 jobs in the quarter, but 900 were offset by hiring in risk management and compliance, bringing the total headcount to 260,400 on March 31.
He expects that to fall to 254,000 after further job cuts in Britain. The bank saved US$400 million of additional costs during the quarter. HSBC's cost-efficiency ratio - the ratio of expenses to income - improved to 53.2 per cent on an underlying basis from 62.8 per cent.
Asked if hot money from global quantitative easing would continue to flow to Hong Kong, Gulliver said hot money in the city "is more likely to have originated from the mainland instead of the West and Japan".