HSBC Reports 1.1% Decline in First-Quarter Pre-Tax Profit to $9.4 Billion

HSBC Reports Disappointing Q1 Pre-Profit, Misses Expectations

HSBC announced on Tuesday that its pre-profit for the first quarter fell to US$9.4 billion, missing the bank's forecast of US$9.6 billion. This represents a 1.1 percent year-on-year drop.

The decline in pre-profit was primarily attributed to higher expected credit losses and other credit impairment charges. HSBC's expected credit losses surged to US$1.3 billion, with a notable contributor being a $400 million "fraud-related, secondary, securitisation exposure with a financial sponsor in the UK". Additionally, a US$300 million increase in allowances was reflected, due to heightened uncertainty and a deterioration in the forward economic outlook caused by the Iran war.

The bank's Hong Kong-listed shares fell more than four percent in afternoon trade. Despite this, HSBC remains confident in achieving its targets. The company forecasts a mid-to-high single-digit percentage adverse impact on profit before tax from various issues, including higher oil prices, rising inflation, a material slowdown in gross domestic product, rising unemployment, and market disruption.

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The bank's ability to manage changes and uncertainties in the global environment, including the Middle East conflict, is seen as a key factor in its confidence to meet its targets. A detailed breakdown of the bank's forecasted impact is as follows: