HSBC first-quarter pre-tax profit down 20 per cent
08 May 2014
HSBC's first-quarter pre-tax profit was down 20 per cent from a year ago to just less than $7 billion, as revenue declined in Brazil and at its investment bank, even as earnings from last year swelled asset sales.
Europe's biggest bank, with operations across 75 countries, said revenue prospects were decent in Asia but stood weaker in Latin America, where it had withdrawn from many markets after a difficult few years.
Bloomberg quoted finance director Iain Mackay as telling analysts and reporters in a conference call that Latin America was under a bit of pressure, particularly in Brazil. He added, overall Asia remained broadly constructive and everywhere else was generally stable.
Earnings in Latin America were down to $310 million in the quarter, falling a third from a year ago despite a 17 per cent drop in losses from bad debts there.
According to chief executive Stuart Gulliver, HSBC was in the second phase of a turnaround aimed at making the bank less complex, more nimble and efficient and able to deliver better returns and dividends for shareholders.
Pretax profit was down to $6.79 billion from $8.43 billion over the same period a year earlier, according to London-based HSBC's statement yesterday.
The lender, which derived the bulk of its profit from Asia, had closed or sold over 60 businesses since 2011 to focus on its most profitable markets and was also seeking to cut costs.
One-time gains from asset sales in 2013 were not repeated in the quarter, even as operating costs declined 2 per cent to $8.8 billion, HSBC said.
In a note to clients yesterday, Chirantan Barua, an analyst at Sanford C Bernstein Ltd said, HSBC's income ''miss was offset by strong cost and risk performance.''
The global banking and markets unit, housing HSBC's investment-banking activities ''performed much better than peers.''
