Skip to main content
The Globe and Mail
Support Quality Journalism.
The Globe and Mail
First Access to Latest
Investment News
Collection of curated
e-books and guides
Inform your decisions via
Globe Investor Tools
Just$1.99
per week
for first 24 weeks

Enjoy unlimited digital access
Cancel Anytime
Enjoy Unlimited Digital Access
Get full access to globeandmail.com
Just $1.99per week for the first 24weeks
Just $1.99per week for the first 24weeks
var select={root:".js-sub-pencil",control:".js-sub-pencil-control",open:"o-sub-pencil--open",closed:"o-sub-pencil--closed"},dom={},allowExpand=!0;function pencilInit(o){var e=arguments.length>1&&void 0!==arguments[1]&&arguments[1];select.root=o,dom.root=document.querySelector(select.root),dom.root&&(dom.control=document.querySelector(select.control),dom.control.addEventListener("click",onToggleClicked),setPanelState(e),window.addEventListener("scroll",onWindowScroll),dom.root.removeAttribute("hidden"))}function isPanelOpen(){return dom.root.classList.contains(select.open)}function setPanelState(o){dom.root.classList[o?"add":"remove"](select.open),dom.root.classList[o?"remove":"add"](select.closed),dom.control.setAttribute("aria-expanded",o)}function onToggleClicked(){var l=!isPanelOpen();setPanelState(l)}function onWindowScroll(){window.requestAnimationFrame(function() {var l=isPanelOpen(),n=0===(document.body.scrollTop||document.documentElement.scrollTop);n||l||!allowExpand?n&&l&&(allowExpand=!0,setPanelState(!1)):(allowExpand=!1,setPanelState(!0))});}pencilInit(".js-sub-pencil",!1); // via darwin-bg var slideIndex = 0; carousel(); function carousel() { var i; var x = document.getElementsByClassName("subs_valueprop"); for (i = 0; i < x.length; i++) { x[i].style.display = "none"; } slideIndex++; if (slideIndex> x.length) { slideIndex = 1; } x[slideIndex - 1].style.display = "block"; setTimeout(carousel, 2500); } //

An HSBC building stands in Hong Kong on Aug. 4, 2020. The bank reported quarterly results on Tuesday.

Tyrone Siu/Reuters

HSBC Holdings PLC beat quarterly profit forecasts and released $400 million it had set aside to cover bad loans caused by the pandemic, as rapid vaccine rollouts in the United States and Britain raise hopes for an economic recovery.

Europe’s biggest bank by assets cautioned, however, that high levels of uncertainty meant it was keeping the bulk of the $3 billion it set aside a year ago to cover potential bad debts.

“We are still being relatively cautious, and we’ve retained about 70 per cent of the reserve build up we did last year,” Chief Financial Officer Ewen Stevenson told Reuters.

Story continues below advertisement

HSBC reported on Tuesday profit before tax of $5.78 billion for the three months to March 30, up from $3.21 billion a year ago and well above analysts’ average forecast of $3.35 billion as compiled by the bank.

However, this compared with $6.21 billion in the same period in 2019, showing the lender has some way to go to get back to pre-pandemic profit levels.

HSBC, which makes the bulk of its profits in Asia, said its credit losses for 2021 were likely to be below the medium-term range of 30-40 basis points it forecast in February.

Despite a plan to shift more business to Asia, Chief Executive Noel Quinn said the lender had no immediate plans to move its headquarters from Britain to the region.

London is still “a good place for the head office of an international bank,” Quinn told reporters.

HSBC shares rose 1.7 per cent in London, the best performers in the benchmark FTSE index and reflecting earlier gains in its Hong Kong-listed shares.

“We are more optimistic than we were back in February, we expect GDP to rebound in every economy in which we operate this year,” Quinn told Reuters, citing the successful rollout of vaccines in the United States and Britain as a key factor.

Story continues below advertisement

RATES SQUEEZE

HSBC’s improved outlook and profits paled in comparison to U.S. rival JPMorgan, which earlier this month reported a 400 per cent increase in quarterly profit and released more than $5 billion in bad loan provisions.

That partly reflected the European lender’s heavy reliance on global interest rates to make money, which it said in February it would try to address by shifting to more fee-based business, such as wealth management.

Hibor, the benchmark lending rate in HSBC’s most profitable market of Hong Kong, was near 10-year lows for much of the quarter, and the lender’s revenue overall fell 5 per cent as such low rates compressed income from lending.

“HSBC is not alone in feeling the squeeze of net interest margins, which tightened again slightly over the quarter, but other banks with huge investment banking arms have been able to capitalize on the trading surge over the past year,” said Susannah Streeter, analyst at online investment platform Hargreaves Lansdown.

While HSBC lagged U.S. peers in its performance, it at least avoided losses from the collapse of U.S. investment fund Archegos that blighted European rival UBS’s results.

HSBC had no direct or indirect exposure to Archegos, Quinn told reporters.

Story continues below advertisement

HSBC also said it was continuing negotiations for the sale of its French retail banking business, but no final decision had been taken. Reuters reported last month that HSBC had entered negotiations to sell the business, which has 270 branches, to private equity firm Cerberus.

The lender likewise had no update on progress to dispose of its similarly underperforming U.S. retail banking business.

Be smart with your money. Get the latest investing insights delivered right to your inbox three times a week, with the Globe Investor newsletter. Sign up today.

Your Globe

Build your personal news feed

  1. Follow topics and authors relevant to your reading interests.
  2. Check your Following feed daily, and never miss an article. Access your Following feed from your account menu at the top right corner of every page.

Follow topics related to this article:

View more suggestions in Following Read more about following topics and authors
Report an error
Due to technical reasons, we have temporarily removed commenting from our articles. We hope to have this fixed soon. Thank you for your patience. If you are looking to give feedback on our new site, please send it along to feedback@globeandmail.com. If you want to write a letter to the editor, please forward to letters@globeandmail.com.

Welcome to The Globe and Mail’s comment community. This is a space where subscribers can engage with each other and Globe staff. Non-subscribers can read and sort comments but will not be able to engage with them in any way. Click here to subscribe.

If you would like to write a letter to the editor, please forward it to letters@globeandmail.com. Readers can also interact with The Globe on Facebook and Twitter .

Welcome to The Globe and Mail’s comment community. This is a space where subscribers can engage with each other and Globe staff. Non-subscribers can read and sort comments but will not be able to engage with them in any way. Click here to subscribe.

If you would like to write a letter to the editor, please forward it to letters@globeandmail.com. Readers can also interact with The Globe on Facebook and Twitter .

Welcome to The Globe and Mail’s comment community. This is a space where subscribers can engage with each other and Globe staff.

We aim to create a safe and valuable space for discussion and debate. That means:

  • Treat others as you wish to be treated
  • Criticize ideas, not people
  • Stay on topic
  • Avoid the use of toxic and offensive language
  • Flag bad behaviour

If you do not see your comment posted immediately, it is being reviewed by the moderation team and may appear shortly, generally within an hour.

We aim to have all comments reviewed in a timely manner.

Comments that violate our community guidelines will not be posted.

UPDATED: Read our community guidelines here

Discussion loading ...

To view this site properly, enable cookies in your browser. Read our privacy policy to learn more.
How to enable cookies