More than 50% of the company’s profits came from Asia
HSBC (LON:HSBA) announced on Tuesday that it made profits that surpassed its expectations as it sees the outlook around the economy improving.
The major bank confirmed an income of $5.8bn for Q1 to March 31, up from $3.2bn the year before.
More than 50% of the company’s profits came from Asia, where the bank conducts a significant portion of its business.
HSBC said it had let go of $3bn worth of cash set aside for bad loans as a result of seeing a brighter outlook.
Strong growth of its mortgage business in Hong Kong and the UK also helped to bolster the bank’s profits.
HSBC is still committed to its restructuring plan, including cutting 35,000 jobs and focusing on getting more client fees in Asia.
HSBC’s profits represent a big reversal for the company after it saw its profits fall by 34% in 2020 as the coronavirus pandemic made an impact on the business.
Noel Quinn, HSBC’s group chief executive, said the bank had made a “good start to the year”.
He said: “Global banking and markets had a good quarter, and we saw solid business growth in strategic areas, including Asia Wealth and trade finance, and mortgages in Hong Kong and the UK.
“We also strengthened our lending pipelines in our retail and wholesale businesses.”
While most of the bank’s profits came from Asia, the company said it was profitable across all regions, confirming that its UK arm made profits of $1bn.
The FTSE 100 bank expects lending to continue to grow in 2021, although that growth depends on the global recovery from the pandemic.
“There doesn’t look like there is an immediate cure for the bank’s underlying ailment, the ultra-low rates plaguing the banking sector,” said Susannah Streeter, senior investment and markets analyst at Hargreaves Lansdown.
“HSBC is not alone in feeling the squeeze of net interest margins, which tightened again slightly over the quarter, but other banks with huge investment banking arms have been able to capitalise on the trading surge over the past year.
“The bank notes that the outlook remains highly uncertain. HSBC’s resilience could be tested as governments remove the arms of support that have been wrapped around their economies to help them limp through the crisis.”