Overview of HSBC's Q1 Performance#
HSBC Holdings has announced a small decline in its profit for the first quarter of the year, primarily due to rising credit losses and operational costs. Despite this, the bank experienced solid revenue growth, largely driven by its wealth management services and increased interest income.
Profit and Revenue Details#
For the three months ending March 31, HSBC reported a profit before tax of $9.4 billion, which is a 1% decrease compared to the same period last year. This decline is attributed to higher expected credit losses and operational expenses, as well as some unexpected costs.
On a positive note, the bank's revenue increased by 6%, reaching $18.6 billion. This growth was fueled by strong income from wealth management fees and an 8% rise in net interest income, which climbed to $8.9 billion. The increase in net interest income was supported by a growth in deposits and reinvestment at higher interest rates.
Rising Credit Losses and Expenses#
HSBC's expected credit losses rose by $400 million to $1.3 billion. This increase is partly linked to a fraud-related issue in the UK and a more uncertain economic outlook, particularly due to ongoing conflicts in the Middle East. Additionally, operating expenses increased by 8% to $8.7 billion, driven by inflation, higher spending on technology, and performance-related pay.
Future Outlook#
Looking ahead, HSBC aims to maintain a return on tangible equity of at least 17% through 2026-2028. The bank has slightly raised its net interest income guidance for 2026 to around $46 billion. However, it has also cautioned that macroeconomic conditions remain unpredictable, leading to an expectation that credit losses may rise to approximately 45 basis points of loans this year, reflecting ongoing global economic risks.