- Pre-tax profit down 20 per cent - Impairments, costs fall - Revenue declines 14 per cent - 'Muted' customer activity noted in April Global banking giant HSBC reported a 20 per cent drop in profits in the first quarter despite lower impairments and costs, mainly as revenues fell in Asia and Latin America and given that the prior year benefitted from a number of one-offs. Meanwhile, in a brief outlook statement, the company said it "continued to experience muted customer activity in April". Reported pre-tax profit (PBT) fell to $6.79bn in the first three months of 2014, down from $8.43bn the year before but above the company-compiled consensus estimate of $6.57bn.The lender pointed out that the first quarter of 2013 included a $1.1bn accounting gain arising from the reclassification of Industrial Bank as a financial investment. On an underlying basis, which excludes this and a number of other items such as foreign currency movements, profits declined by a lesser 13% to $6.62bn. Broker Investec highlighted the fact that PBT ex own-credit came in 2% below consensus. Loan impairment charges and other credit risk provisions totalled $798m during the period, down from $1.17bn the previous year. Meanwhile, operating expenses fell to $8.85bn from $9.35bn helped by so-called "cost-saving initiatives". Reported revenue fell to $15.9bn in the first quarter, down 14% over the year and well below analysts' forecast of $16.52bn Underlying revenues fell 8% to $15.81bn as growth in Commercial Banking was offset by weakness in the Retail Banking and Wealth Management, and Global Banking and Markets divisions. "In the first quarter we maintained control of costs and further demonstrated our capital resilience. Whilst revenue was lower than the previous year's first quarter, which benefited from a number of specific items, we have seen progress in revenue over the trailing quarters," said Chief Executive Stuart Gulliver. The stock pared losses slightly after the statement and was down 0.8% at 599.4p by 10:14 on Wednesday, having hit a low of 590p early on. Analysts weigh inCommenting on the results, Richard Hunter, Head of Equities at Hargreaves Lansdown Stockbrokers, said: "Against tough comparatives, a challenging trading backdrop and a lacklustre wider market, HSBC has produced a somewhat disappointing set of numbers."He said that with the exception of Commercial Banking, all of HSBC's units have "found the going tough".Meanwhile, Ed Salvesen, Deputy Head of Equity Research at wealth manager Brewin Dolphin said: "Overall, we would argue that this is a mixed set of results: costs, impairments and capital were all either better or in line with expectations. However, the revenue miss has disappointed. This is really down to Asia (down 22.5% year-on-year) and Latin America (down 15%). This validates our argument for being bearish on the emerging market exposed banks and our continued preference for UK retail exposure. "[...] If revenue can show signs of improvement then the investment case will return, especially with interest rates increasing in 2015. We continue to believe the shares will underperform the sector.""We see no easy way out and expect return-on-equity (RoE) to remain sub-10% until 2017. Despite reasonable dividend support, trading on 1.3 times estimated 2014 tangible net asset value (tNAV´) and 12.9 times 2014 earnings per share (EPS), we do not yet see the valuation as compelling," Ian Gordon from Investec added. BC