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HSBC first-quarter profit soars as global economic recovery takes shape
- Pre-tax profit was US$5.8 billion, beating a consensus estimate of US$3.34 billion
- Improving economic outlook allowed HSBC to shrink reserves for soured loans
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HSBC, the biggest of Hong Kong’s currency-issuing banks, said its profit more than doubled in the first quarter as economies from London to Hong Kong recovered from the coronavirus pandemic, allowing it to shrink its reserves for bad loans.
The London-based lender continued to face pressure from historically low interest rates on its traditional lending products in the first three months of the year, which led to a 5 per cent decline in revenue.
To offset the drag from lower rates, the bank is placing greater emphasis on fee-generating products and serving wealthy clients in Asia. Customer balances in its Asia wealth business increased 18 per cent in the quarter and 23 per cent globally.
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The bank, Europe’s largest by assets, also continues to target reducing its annual costs by US$5 billion to US$5.5 billion by 2022. For example, it plans to slash its office footprint globally by 20 per cent this year as it adopts a more flexible work-from-home policy.
“We’re feeling more optimistic about the rest of the year than we did at the full year [point], but remain cautious,” Noel Quinn, HSBC’s CEO, said on a conference call with journalists. “It’s still early days, but we’re carrying good momentum into the second quarter.”
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