HSBC Holdings plc (LON: HSBA) said on Tuesday that its net profit in the first quarter posted an over 100% growth on a year over year basis. The company attributed the increase to improvement in the economic outlook that enabled it to release allowances it had set aside for expected loan losses. CFO Ewen Stevenson said:
“We are still being relatively cautious, and we’ve retained about 70% of the reserve build up we did last year.”
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HSBC shares opened at 423 pence in the stock market on Tuesday and are currently trading at a higher 433 pence. In comparison, the largest bank in Europe had started the year at 380 pence per share after recovering from 283 pence per share in the last week of September 2020.
HSBC reports £9.36 billion of revenue
HSBC said that its net profit in Q1 came in at £2.79 billion. In the comparable quarter of last year, its net profit was capped at £1.29 billion. Expected credit losses, the British multinational added, fell sharply in the first quarter to £288.12 million versus the year-ago figure of £2.16 billion.
HSBC valued its revenue in the first quarter at £9.36 billion that represents a 5.0% annualised decline. The investment bank attributed the decline to lower interest rates in recent months due to the ongoing Coronavirus pandemic that has so far infected more than 4.4 million people in the United Kingdom and caused over 127 thousand deaths.
For the full year, the financial services holding firm now forecasts a roughly 5% increase in consumer lending. HSBC reiterated that dividend payments were unlikely to be resumed this year. In February, the London-based bank said its earnings slipped 35% in 2020 due to the health emergency.
CEO Noel Quinn’s comments on Tuesday
Chief Executive Noel Quinn commented on the financial update on Tuesday and said:
“We are more optimistic than we were back in February, we expect GDP to rebound in every economy in which we operate this year.”
In separate news from the United Kingdom, hotel and restaurant company Whitbread plc said it swung to a pre-tax loss for fiscal 2021 due to the COVID-19 disruptions.
HSBC performed largely downbeat in the stock market last year with an annual decline of roughly 35%. At the time of writing, it is valued at £87.81 billion and has a price to earnings ratio of 31.06.