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HSBC profit falls amid volatile markets | |
(about 1 hour later) | |
Banking giant HSBC has reported a 14% drop in profits for the first quarter following "extreme levels of volatility" in financial markets at the start of the year. | Banking giant HSBC has reported a 14% drop in profits for the first quarter following "extreme levels of volatility" in financial markets at the start of the year. |
Profit before tax came in at $6.1bn (£4.17bn) for the three months to March, down from $7.1bn a year ago. | Profit before tax came in at $6.1bn (£4.17bn) for the three months to March, down from $7.1bn a year ago. |
However, analysts had expected a far steeper fall in profits. | However, analysts had expected a far steeper fall in profits. |
HSBC chief executive Stuart Gulliver said the bank had been "resilient in tough market conditions". | HSBC chief executive Stuart Gulliver said the bank had been "resilient in tough market conditions". |
Adjusted pre-tax profits, including currency effects and one-off items, fell 18% to $5.4bn (£3.7bn). | |
Job cuts | |
HSBC cut almost a thousand jobs worldwide in the quarter, leaving it with 254,212 full-time staff across 71 countries and territories. | |
Mr Gulliver said the bank was confident of hitting its $5bn (£3.5bn) cost-cutting target by the end of 2017. | |
Independent banking analyst Frances Coppola said it was "likely there will be more job cuts" at HSBC following the fall in profits. | Independent banking analyst Frances Coppola said it was "likely there will be more job cuts" at HSBC following the fall in profits. |
But she said the results "could have been worse" after financial markets were highly volatile in January and February. | But she said the results "could have been worse" after financial markets were highly volatile in January and February. |
Challenging | Challenging |
In the final three months of 2015, HSBC had reported a loss of $858m, but lower compliance and UK bank levy costs helped it to return to profit in the latest quarter. | |
HSBC's adjusted revenue for the first quarter amounted to $13.9bn, a 4% drop from the same time last year. | HSBC's adjusted revenue for the first quarter amounted to $13.9bn, a 4% drop from the same time last year. |
The bank also said the development of its Asian business was gaining momentum, "despite a challenging environment with key increases in market share in debt capital markets, China M&A and syndicated lending". | The bank also said the development of its Asian business was gaining momentum, "despite a challenging environment with key increases in market share in debt capital markets, China M&A and syndicated lending". |
HSBC has had its headquarters in the UK since 1993, but the financial institution makes most of its money overseas, and Asia accounts for the majority of its profit. | HSBC has had its headquarters in the UK since 1993, but the financial institution makes most of its money overseas, and Asia accounts for the majority of its profit. |
The bank's shares are listed in London, Paris, New York and Hong Kong. In London, HSBC's shares were up 1% in early trading. | |
Dividend | |
Ahead of the results, analysts had warned HSBC might signal an end to its highly-valued progressive dividend, which delivers ever-increasing payouts. | |
However, HSBC maintained the progressive target and left its dividend unchanged from the same period last year at $0.10 (£0.07). | |
The bank also announced that the $5.2bn sale of its Brazil unit to banking giant Banco Bradesco received preliminary approval from competition regulators. | |
Volatility | Volatility |
Swiss bank UBS also reported a sharp drop in income for the first quarter of the year, with pre-tax profit falling 64% year-on-year to 978m Swiss francs ($1.03bn; £689m). | |
UBS pointed to "substantial volatility" as one of the main reasons for the fall, along with wider economic and geopolitical uncertainty. | |
However, French bank BNP Paribas reported a 3.4% rise in first-quarter pre-tax income to €2.6bn (£2bn). | However, French bank BNP Paribas reported a 3.4% rise in first-quarter pre-tax income to €2.6bn (£2bn). |