HSBC share price up 2% after Q1 profit exceeds expectations

HSBC recorded a strong set of Q1 earnings on Friday that beat expectations, with the lender reporting pre-tax profit of $6.21 billion, representing a 30.7% increase over the same period last year.

Analysts forecasts compiled by Refinitiv predicted that the bank would record pre-tax profit of $5.4 billion for the January to March trading period.

‘These are an encouraging set of results, particularly in the context of heightened economic uncertainty globally,’ HSBC Group CEO John Flint said.

‘We remain focused on executing the strategy we outlined last June, while also being alert to risks in the global economy.’

HSBC results: key figures

The bank’s revenue in Q1 also exceeded analyst expectations, with the lender recording $14.4 billion in sales, representing a 5.24% increase over last year’s $13.7 billion and well above the $13.78 billion analysts forecast.

The strong set of results helped the bank to increase its earnings per share to 21 cents, representing a 40% increase with the lender’s return on tangible equity up 220 bps to 10.6%.

HSBC announced a dividend of 10 cents a share and said it will give a decision on its 2019 share buyback scheme in its next trading update.

HSBC recorded profit after tax $4.9 billion and brought its operating expenses down by 12%, with the reduction in outgoings helping the bank to return to ‘positive adjusted jaws’ of 6% in Q1. The jaws ratio is positive when revenues outpace spending.

HSBC vows to continue cost cutting

The bank has pledged to continue reining in costs after its Q1 results beat analysts’ expectations in one of the best financial quarters the lender has had in more than three years.

‘We are not declaring victory on jaws for the full year,’ HSBC CFO Ewen Stevenson told reporters.

The combination of cost-cutting throughout the bank and HSBC’s strong income from its core Asian business has helped drive growth at the bank, offsetting poor performances in its investment banking unit.