HSBC posts surprise fall in quarterly profits

HSBC Building

HSBC Building

Reuters reports that the result had fallen short of the $5.76 billion average of analysts' estimates compiled by the bank.

HSBC, Europe's largest banks by assets, on Friday reported a 4 percent fall in profit before tax in the first quarter of 2018 as operating costs rose.

HSBC's common equity tier 1 ratio - a measure of financial strength - was 14.5 per cent at the end of March, flat compared with end-December and higher than 14.3 per cent in the first quarter of a year ago.

HSBC said it's in "active discussions" with the US Department of Justice about solving civil claims based on the department's investigation of HSBC's legacy RMBS securitisation activities.

In 2017, HSBC returned a total of $3 billion to shareholders through share buybacks and paid more in dividends than any other major European or American bank, while maintaining its capital buffers as revenue grew.

"Given the growth opportunities we now see, we expect this to be the only share buyback that we announce in 2018", Europe's biggest bank by assets said, adding the process was expected to start shortly.

Mr Flint said in the first quarter HSBC "increased investment in retail banking and wealth management to further grow our market share in the United Kingdom and mainland China".

The bank's Hong Kong-listed shares, a heavyweight on the benchmark Hang Seng Index, fell 2.51 percent after the stock market resumed trading following a lunch break.

"Our primary focus is to grow the businesses safely, and we have increased investment to deliver that aim", Chief Executive John Flint said in a statement.

The bank's pre-tax profit was US$4.76 billion for the three months ended March 31, compared with US$4.96 billion in the year-ago period. Analysts at UBS said they had expected it to buy back twice as many shares.

"We've got strong progression in terms of revenue across our four global businesses", he said.

Revenue increased 6 per cent to US$13.7 billion, driven by higher deposit margins, growth in retail banking, wealth management and commercial banking in Asia. "So, pretty happy with where we started off the year".

Flint stated that HSBC is benefiting from rate of interest hikes and financial progress, notably in Asia.

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