HSBC Eyes Brexit After Profit Boost -- WSJ
May 04 2019 - 3:02AM
Dow Jones News
By Margot Patrick and Saurabh Chaturvedi
This article is being republished as part of our daily
reproduction of WSJ.com articles that also appeared in the U.S.
print edition of The Wall Street Journal (May 4, 2019).
HSBC Holdings PLC said it's keeping a watchful eye on the U.K.
economy ahead of Brexit as it posted better-than-expected
first-quarter results Friday.
The Asia-focused lender posted $4.13 billion net profit, up
33.7% from $3.09 billion a year earlier. The bank had been expected
to make a net profit of $3.7 billion, according to consensus
estimates released by the company last month.
Lending and deposits grew in its core Hong Kong and U.K.
markets, helping offset a revenue decline in investment banking.
Adjusted revenue for the quarter rose 9% to $14.43 billion from
$13.2 billion, while operating expenses were up 3% to $8.06 billion
from $7.8 billion. The adjusted figures strip out currency
moves.
Chief Financial Officer Ewen Stevenson said the bank is "growing
in the areas where we want to be growing," such as Asian retail
banking and global transaction banking, and that its cost growth is
manageable. He said U.K. mortgage lending and deposits grew in the
quarter too, but that it's watching closely for any deterioration
in the British economy and customers' ability to repay debt.
"If there's one market in the world we're watching closely for
credit it would be the U.K. We have been growing the top line
nicely but obviously Brexit uncertainty creates issues for business
and consumer confidence and that's what we're seeing," Mr.
Stevenson said.
HSBC shares ended the day 2.1% higher in Hong Kong, making the
bank one of the top gainers on the Hang Seng Index. Shares in the
bank were up 2.4% in London.
Mr. Stevenson said the bank has seen limited impact from the
continuing trade dispute between the U.S. and China and hasn't felt
the effects of a slowdown in global trade.
Within its global banking and markets business, global trade
receivables and finance revenue grew 12% in the quarter to $211
million from $189 million. That helped counter a 9% fall in global
banking revenue and a 5% fall in global markets revenue from lower
client activity.
Mr. Stevenson said an effort to improve returns on equity in its
U.S. business is still a work in progress and remains the bank's
most challenging strategic priority. HSBC has around 1.3 million
retail-banking and wealth-management customers in the U.S.,
clustered mainly on the east and west coasts, as well as
commercial- and investment-banking operations in the country.
Write to Margot Patrick at margot.patrick@wsj.com and Saurabh
Chaturvedi at Saurabh.Chaturvedi@wsj.com
(END) Dow Jones Newswires
May 04, 2019 02:47 ET (06:47 GMT)
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