{"id":112929,"date":"2021-04-27T09:30:45","date_gmt":"2021-04-27T09:30:45","guid":{"rendered":"https:\/\/fin2me.com\/?p=112929"},"modified":"2021-04-27T09:30:45","modified_gmt":"2021-04-27T09:30:45","slug":"hsbc-profit-rises-79-as-vaccine-rollout-sparks-cautious-optimism","status":"publish","type":"post","link":"https:\/\/fin2me.com\/markets\/hsbc-profit-rises-79-as-vaccine-rollout-sparks-cautious-optimism\/","title":{"rendered":"HSBC profit rises 79% as vaccine rollout sparks cautious optimism"},"content":{"rendered":"

LONDON (Reuters) -HSBC Holdings PLC reported better-than-expected quarterly profit and released $400 million it had set aside to cover pandemic-induced bad loans, as successful vaccine rollouts in the United States and Britain prompted a brighter economic outlook.<\/p>

FILE PHOTO: An HSBC bank logo is pictured during the coronavirus disease (COVID-19) pandemic in the Manhattan borough of New York City, New York, U.S., October 19, 2020. REUTERS\/Carlo Allegri<\/figcaption>

HSBC cautioned, however, that uncertainty about the global recovery meant it was unlikely to sustain that level of reduction in the $3 billion bad debt provision it had set aside a year ago as the pandemic took hold.<\/p>\n

\u201cWe are still being relatively cautious, and we\u2019ve retained about 70% of the reserve build up we did last year,\u201d Chief Financial Officer Ewen Stevenson told Reuters.<\/p>\n

\u201cSome of that you would expect to unwind over the next year or so, but we don\u2019t know we are going to see a repeat of what we just saw,\u201d Stevenson said.<\/p>\n

Europe\u2019s biggest bank by assets on Tuesday posted profit before tax of $5.78 billion for the three months ended on March 30, up from $3.21 billion a year ago and well above an average analyst forecast of $3.35 billion compiled by the bank.<\/p>\n

However, this compared with $6.21 billion in the same period in 2019, showing the lender still has some way to go to get back to pre-pandemic profit levels.<\/p>\n

The bank, which makes the bulk of its profits in Asia, said its credit losses for 2021 were likely to be below the medium-term range of 30-40 basis points it forecast in February.<\/p>\n

Related Coverage<\/p>\n<\/p>\n

HSBC shares rose nearly 1% in London, among the best performers in the benchmark FTSE index and echoing earlier gains in its Hong Kong-listed shares.<\/p>\n

\u201cWe are more optimistic than we were back in February, we expect GDP to rebound in every economy in which we operate this year,\u201d Chief Executive Noel Quinn told Reuters, citing the successful rollout of vaccines in the United States and Britain as a key factor.<\/p>\n

RATES SQUEEZE<\/h2>\n

HSBC\u2019s improved outlook and profits paled in comparison to U.S. rival JPMorgan, which earlier this month reported a 400% increase in quarterly profit and released more than $5 billion in bad loan provisions.<\/p>\n

That partly reflected the European lender\u2019s heavy reliance on global interest rates to make money, which it said in February it will try to address by shifting to more fee-based business, such as wealth management.<\/p>\n

Hibor, the benchmark lending rate in HSBC\u2019s most profitable market of Hong Kong, was near 10-year lows for much of the quarter, and the lender\u2019s revenue overall fell 5% as such low rates compressed income from lending.<\/p>\n

\u201cHSBC is not alone in feeling the squeeze of net interest margins, which tightened again slightly over the quarter, but other banks with huge investment banking arms have been able to capitalise on the trading surge over the past year,\u201d said Susannah Streeter, analyst at online investment platform Hargreaves Lansdown.<\/p>\n

HSBC also said on Tuesday it was continuing negotiations for the sale of its French retail banking business, but no final decision has been taken. Reuters reported last month that HSBC had entered final negotiations to sell the business, which has 270 branches, to private equity firm Cerberus.<\/p>\n

The lender likewise had no update on progress to dispose of its similarly underperforming U.S. retail banking business.<\/p>\n

HSBC is the first of Britain\u2019s big banks to announce first quarter earnings. Lloyds Banking Group is due to report on Wednesday, Standard Chartered and NatWest Group on Thursday, and Barclays on Friday.<\/p>\n

Source: Read Full Article<\/a><\/p>\n","protected":false},"excerpt":{"rendered":"

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