First-quarter profits miss forecasts at HSBC

(Sharecast News) - HSBC posted a surprise fall in quarterly earnings on Tuesday, despite a spike in net interest income, after credit impairments rose at Europe's largest lender. The bank saw revenues rise by an above-forecast 6% in the first quarter to $18.6bn, with net interest income 8% stronger at $8.9bn and an 18% hike in fees in its wealth division, to $2.7bn.

However, pre-tax profits fell to $9.4bn from $9.5bn a year previously, missing forecasts for around $9.6bn, reflecting "higher expected credit losses and other credit impairment charges" in the quarter.

HSBC said expected credit losses had risen by $400m to $1.3bn, including a loss relating to a British fraud case and a $300m increase in allowances "to reflect heightened uncertainty and a deterioration in the forward economic outlook due to the onset of the conflict in the Middle East". It also flagged wider geopolitical tensions and higher trade tariffs.

However, chief executive Georges Elhedery remained upbeat.

He said: "We continued to make positive progress in creating a simple, more agile, growing HSBC. Each of our four businesses contributed to firm-wide revenue growth. In periods of greater uncertainty, customers turn to us more as their trusted partner to navigate financial strength, stability and expertise."

HSBC retained all its financial targets for 2026, including a return on tangible equity of 17% or better. It boosted its NII forecast by $1bn to $46bn, "reflecting an improved interest rate outlook, while recognising the outlook remains volatile and uncertain".

Since taking up the role in September 2024, Elhedery has looked to radically reshape HSBC's global offering by refocusing the business on Asia, its biggest market. He has also sought to slash costs.

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