HSBC bounced back from a “horrible” end to last year to record its best quarter in more than three years today — but it remains nervous about the UK.
Profits at Europe’s biggest bank jumped 31% to $6.2 billion (£4.8 billion) in the quarter to March after doing well in Asia, the source of three-quarters of its earnings. But it set aside $200 million to cover bad loans made mainly to UK clients hurt by the economic uncertainty of Brexit.
HSBC’s results last time were widely criticised by analysts, who today were much more upbeat. Ian Gordon at Investec said today’s numbers are a “significant improvement” on “pretty awful” figures last time. HSBC finance director Ewen Stevenson, just arrived from Royal Bank of Scotland, said: “In the fourth quarter of last year we had some very negative markets that took us by surprise. Equity markets have recovered.”
HSBC says it is cracking down on costs and thinks it has room to grow in the UK. It has only a 7% share of the UK mortgage market, which it expects to rise. America remains problematic and Stevenson said: “In the US and in Continental Europe we’ve got quite a lot of capital that is not earning quite enough returns.”
Chief executive John Flint said: “These are an encouraging set of results, particularly in the context of heightened economic uncertainty globally.”
The bank said its “US turnaround” is progressing but “remains our most challenging strategic priority”. Investors think the US arm has been poor for years.
HSBC’s figures were good enough to send the FTSE 100 a little higher after three down days. HSBC shares gained 16p to 684p.
