LONDON (Alliance News) - Europe's largest bank HSBC Holdings PLC on Friday reported a "good start" to 2019, seeing a significant rise in first quarter profit driven by its Retail Banking & Wealth Management and Commercial Banking businesses.
For the three months ended March, pretax profit rose 30% to USD6.21 billion from USD4.76 billion the year prior. Excluding the impact of currency translation, pretax profit rose 9.5% on the year before.
The Asia-focused lender's revenue increased 14% in the first quarter to USD14.43 billion from USD12.70 billion the year before. Revenue performance was driven by strong growth in all of HSBC's three main global businesses.
"We have made a good start to 2019. Reported profit after tax was up significantly on the first quarter in 2018, thanks largely to strong revenue growth in our Retail Banking & Wealth Management and Commercial Banking businesses, and favourable movements in significant items," said Chief Executive John Flint.
HSBC's net interest margin at March 31 was 1.59%, down from 1.67% at the end of the first quarter in 2018.
For the first quarter, return on tangible equity stood at 10.6%, up from 8.4% the year prior.
For the three months ended March, the jaws ratio was at 6.0%. The jaws ratio - a key financial performance indicator - is the difference between the percentage growth in income and the percentage growth in expenses.
Group operating expenses decreased 10% to USD8.22 billion from USD9.14 billion the year before.
The CET1 ratio for HSBC ended the period at 14.3%, an increase from 14.0% at December 31.
"Our three main global businesses performed well. Retail Banking & Wealth Management generated a significant increase in adjusted revenue on the back of higher lending and deposit balances, notably in the UK and Hong Kong, and from positive market impacts in insurance manufacturing. Commercial Banking delivered a double-digit increase in adjusted revenue, owing mainly to our continued strength in transaction banking, with growth across all regions. Global Banking & Markets adjusted revenue was up relative to a strong first quarter last year, with favourable movements on credit and funding valuation adjustments and growth in transaction banking more than offsetting the impact of economic uncertainty on our Global Banking, equities and fixed income businesses," added Flint.
HSBC's loans & advances to customers increased in the quarter to USD1.01 trillion from USD981.70 billion at December 31. The lender reported a 1.6% rise in risk-weighted assets, however, rising to USD879.5 million from USD865.3 million at the end of 2018.
The bank's customer accounts at March 31 was flat at USD1.36 trillion.
HSBC proposed a 0.10 US cent per share first quarter dividend. This was flat on the year prior.
Flint concluded: "These are an encouraging set of results, and we remain focused on executing the strategy we outlined last June. At the same time, we remain alert to risks in the global economy. We are proactively managing costs and investment in line with this more uncertain outlook, and will continue to do so."
HSBC said its US turnaround is "progressing" and still remains its "most challenging strategic priority".
HSBC Holdings (HSBA)