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HSBC claims strong recovery in revenue during first quarter
By Pan Pylas |
May 12, 2009, Tuesday
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Print Edition
Print Edition
HSBC Holdings PLC, Europe's biggest bank, said yesterday that it has made a "resilient" start to 2009 and that its revenues have recovered strongly from the last quarter of 2008, when business was hit hard by the financial crisis.
In its first-quarter trading update, HSBC said its underlying pre-tax profits were "well ahead" of the same period in 2008, largely because of some US$6.6 billion worth of gains it made on the valuation of its debts, compared with the US$2.5 billion it recorded last year.
However, excluding those debt revaluations, HSBC said profits were lower - but still significantly higher than in the fourth quarter of 2008 - as revenue growth was more than offset by higher loan impairment charges and other credit-risk provisions.
HSBC's Chief Executive Michael Geoghegan said the company's operating performance in the first quarter was encouraging, boosted by record results from its global banking and markets divisions.
He said the recent rights issue, which raised US$17.8 billion means the bank is well-positioned to "ride out the economic uncertainty ahead, and to take advantage of opportunities to grow."
No government bailout
Unlike other British-based banks, HSBC did not take any government cash to shore up its capital position, opting instead to raise money itself.
HSBC did not give an exact figure for the total amount it has set aside to cover bad debts, though it did say the figure was up on the same period last year.
Last year, HSBC wrote down around US$25 billion worth of assets.
"Loan impairment charges and other credit risk provisions were higher than in Q1 2008, but lower than in Q4 2008 on both an underlying and a reported basis, and in the US were also slightly lower than expected," the company said.
In its first-quarter trading update, HSBC said its underlying pre-tax profits were "well ahead" of the same period in 2008, largely because of some US$6.6 billion worth of gains it made on the valuation of its debts, compared with the US$2.5 billion it recorded last year.
However, excluding those debt revaluations, HSBC said profits were lower - but still significantly higher than in the fourth quarter of 2008 - as revenue growth was more than offset by higher loan impairment charges and other credit-risk provisions.
HSBC's Chief Executive Michael Geoghegan said the company's operating performance in the first quarter was encouraging, boosted by record results from its global banking and markets divisions.
He said the recent rights issue, which raised US$17.8 billion means the bank is well-positioned to "ride out the economic uncertainty ahead, and to take advantage of opportunities to grow."
No government bailout
Unlike other British-based banks, HSBC did not take any government cash to shore up its capital position, opting instead to raise money itself.
HSBC did not give an exact figure for the total amount it has set aside to cover bad debts, though it did say the figure was up on the same period last year.
Last year, HSBC wrote down around US$25 billion worth of assets.
"Loan impairment charges and other credit risk provisions were higher than in Q1 2008, but lower than in Q4 2008 on both an underlying and a reported basis, and in the US were also slightly lower than expected," the company said.
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