By Max Colchester and Margot Patrick 

LONDON-- HSBC Holdings PLC's management will make a decision on whether to quit the U.K. by the end of the year, the bank's chief executive said on Tuesday.

The lender, which makes the vast majority of its profit outside the U.K., said that it is reviewing whether to move its headquarters away from London in the face of increased taxation and restrictions on the size of the bonuses it can pay its employees. HSBC Chief Executive Stuart Gulliver said that the executive committee would report back to the bank's board by the end of the year. If the board validates the move, then an extraordinary general meeting would have to be held.

"This isn't meant to be a threat, this is just very objectively looking at a few facts," Mr. Gulliver said on a call with reporters.

The tussle over HSBC's domicile comes as the Asia-focused bank weighs a wider restructuring. On Tuesday the bank said that net profit inched up 1% in the first three months of the year to $5.3 billion, bolstered by a strong performance at its markets business. However high costs continue to dog the bank. Adjusted operating expenses rose 6% on the back of higher staff and compliance spending.

The bank is set to present a refined strategy on June 9, which analysts expect will lead to the bank shrinking further. On Tuesday, Mr. Gulliver reiterated that businesses in the U.S., Mexico, Brazil and Turkey made returns that were "unacceptable."

However he played down rumors that the bank would exit large parts of its U.S. franchise saying that investors should "expect a restructuring story." Following a series of ill-judged acquisitions, HSBC has had to swallow huge write-downs in the region, prompting some investors to questions whether it should quit the U.S. altogether. On Tuesday, Mr. Gulliver played down those fears saying that the bank still relies on its U.S. units to provide dollar funding and access to big U.S. corporates that do business around the world.

The future is less certain for the bank's Brazilian and Turkish businesses. HSBC has begun sounding out prospective buyers for the two units, according to people familiar with the matter. On Tuesday, Mr. Gulliver declined to comment on whether the bank would quit those two countries.

The long-term future is also hazy for HSBC's U.K. unit. The bank is awaiting more detail on the U.K.'s "ring fencing" rules--which will see lenders' retail businesses segregated from their investment-bank operation--before deciding what to do with the unit. These rules, which don't come into action until 2019, will force the U.K. retail unit to have its own independent board and management. HSBC fears having a large investment in a unit it couldn't control, Mr. Gulliver said. But he added that it was "way too early" to decide whether to spin off the U.K. unit as the rules hadn't yet been finalized.

Write to Max Colchester at max.colchester@wsj.com and Margot Patrick at margot.patrick@wsj.com

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