Europe’s largest bank, HSBC, reported a first-quarter pre-tax profit of $9.4 billion on Tuesday, falling short of analysts’ expectations attributed to increased anticipated credit losses and other impairment charges. Despite a year-on-year revenue increase of 6%, which surpassed estimates thanks to robust wealth management fees and additional income streams, the profit remains a slight dip from $9.5 billion reported in the same quarter last year.
In detail, HSBC’s results for the first quarter showed pre-tax profit at $9.37 billion, slightly lower than the projected $9.59 billion, while revenue reached $18.62 billion, exceeding the forecast of $18.49 billion. The bank conveyed its ongoing commitment to a cost reduction goal, aiming for a $1.5 billion annualized cut by the end of June 2026. This includes expected benefits from the privatization of Hang Seng Bank, projected to yield around $0.5 billion in pre-tax revenue and synergies by the end of 2028.
HSBC completed the privatization of Hang Seng Bank on January 26, with its shares subsequently delisted from the Hong Kong Stock Exchange. In light of current geopolitical tensions, particularly the ongoing conflict in the Middle East, HSBC expressed concerns about various economic risks, including rising oil prices and inflation, as well as a potential GDP slowdown. The bank cautioned that if these risks materialized, it could negatively impact its profit before tax by a “mid-to-high single digit percentage.”
While the bank continues to target a return on tangible equity (RoTE) of 17%, it acknowledged that adverse conditions from the Middle East crisis could potentially lower the RoTE, excluding notable items, below this target by 2026. In a gesture of confidence, the HSBC board approved an interim dividend for 2026 set at 10 cents per share.
