HSBC beat forecasts with a 31% rise in first quarter profit, with its Retail Banking and Wealth Management unit reporting adjusted pre-tax profit of $2.23bn, up 19% from $1.87bn in the first quarter of 2018.
The bank said its reported profit before tax in the first quarter was $6.213bn, a 30.7% jump from last year's $4.755bn. Analyst forecasts compiled by Refinitiv showed that the bank's reported profit before tax was expected to come in at $5.399bn for the January to March period.
HSBC's revenue for the quarter was $14.428bn, 5.24% higher than last year's $13.71bn. Refinitiv's estimate for revenue had been $13.788bn.
We look at where we should invest and have headcount all the time, at where we need to employ new headcount in some places and reduce in others"
Ewen Stevenson, chief financial officer, said the economic outlook had worsened since last summer, when the bank's chief executive John Flint unveiled new profitability targets, and that the lender would need to "moderate" cost growth.
"When John announced the plan in June, if you looked at underlying revenue growth, the underlying macro trends were more positive then," said Stevenson.
"Naturally, if you were to run the same plan today, you'd assume less revenue growth and less cost growth." Stevenson said the focus on costs could result in job losses in some parts of the business, but that the bank's overall headcount of 238,000 employees would remain roughly the same.
"We look at where we should invest and have headcount all the time, at where we need to employ new headcount in some places and reduce in others," he added.
The bank reported wealth management revenues of $1.91bn, an 8% increase from a year ago.
Adjusted operating expenses at the wealth division increased 5% year-on-year to $3.45bn.
The rise in expenses was said to be due to higher staff expenses, mainly in Asia, and growth initiatives.
However, HSBC Global Private Banking arm's adjusted pre-tax profit dropped 12% to $98m from $111m.
The decrease was said to be driven by the bank's repositioning actions in the US.The unit's adjusted revenue dipped 4% to $450m from $467m.
Adjusted operating expenses at the division dropped 3% to $350m from $359m.
The bank attributed the fall in expenses to the partial release of a provision related to the wind-down of its Monaco business.
The results for the London-headquartered bank, which makes the bulk of its profits in Asia, showed both the benefits and costs of its global reach and business mix, at a time when other European lenders are shrinking.
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