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London - HSBC Holdings reported a bigger first-quarter profit than analysts forecast, citing cost controls and strength in commercial banking for weathering turbulence in global markets.
Pre-tax profit fell to $6.1bn from $7.1bn a year earlier, the London-based bank said in a Hong Kong exchange filing on Tuesday. That compared with the $4.3bn average estimate of 14 analysts compiled by the lender.
Operating expenses fell 6.6% from a year earlier and chief executive officer Stuart Gulliver said that HSBC was confident of hitting its cost targets by the end of 2017. He cited an "increasing impact" of efforts to rein in spending, after slowing Chinese growth and low commodity prices contributed to an unexpected fourth-quarter loss and tempered plans to redeploy $100bn of assets in Asia and hire thousands of staff in the world’s second-biggest economy.
"Commercial banking continued its momentum in spite of the slowdown in global trade," Gulliver said. He described the lender’s performance as “resilient in tough market conditions that affected the entire banking sector.
Gulliver, 57, and Chairman Douglas Flint, 60, the longest-serving duo at the helm of a European bank, are nearing the end of their terms: Flint is stepping down next year, and his replacement will start the search for a new CEO."
Bad loans
Charges for bad loans doubled to $1.16bn, compared with an estimate of $999m, as credit soured in oil, gas, metals and mining.
Since 2011, Gulliver has slashed more than 87 000 jobs, exited at least 80 businesses and reduced the bank’s sprawling footprint to 71 countries and territories from 88. Alongside most other European banks, the CEO has been struggling to boost profitability in the face of record-low interest rates, misconduct fines and rising regulatory costs.
Risk-weighted assets rose during the quarter because of increased corporate lending, the bank said. HSBC plans a reduction of about $290bn of total risk-weighted assets while redeploying $100bn to $150bn of those assets in Asia.
The bank is targeting a return on equity of more than 10% by 2017.
