Hong Kong banking giant HSBC said on May 4, 2018 that pre-tax profit dipped four percent to 4.76 billion USD in the first three months of the year, adding that it would buy back 2 billion USD worth of stock. / AFP PHOTO / Anthony WALLACE
HONG KONG, China (AFP ) — Hong Kong banking giant HSBC said Friday that pre-tax profit dipped four percent to $4.76 billion in the first three months of the year owing to rising operating costs but added it would buy back $2 billion worth of stock.
It also said revenue rose six percent to $13.7 billion in the period as it benefits from an improving global economy and rising interest rates.
The upbeat January-March results follow a strong 2017, which was boosted by a recovery that saw it lay off tens of thousands of staff since 2015 as part of a wide-ranging overhaul.
Chief executive John Flint welcomed the results, saying: “Our global businesses performed well in the first quarter, maintaining momentum from the end of 2017.
“We continue to benefit from interest rate rises and economic growth, particularly in Asia. Our primary focus is to grow the businesses safely, and we have increased investment to deliver that aim.”
He added that he was positive about the outlook for 2018.
The improving global economy has led central banks around the world to either lift borrowing costs or at least consider lifting them as the decade of post-crisis easy money comes to an end.
Leading the way is the Federal Reserve, which analysts expect to announce at least two more hikes this year, helping lenders.
Jackson Wong, an analyst at Huarong International Securities, was upbeat about the outlook, saying: “I expect there will be higher growth in second quarter or the next half year, since HSBC will focus more on China and Southeast Asia.
“If HSBC is more aggressive and puts more focus on its strength, which is wealth management products, higher growth will come back in the second half of the year.”
But Dickie Wong, executive director of research at Kingston Securities, said the $2-billion share buyback was below expectations and would “be a kind of a support to its share price but not a boost”.
HSBC’s share price sank more than two percent in the afternoon in Hong Kong.
The London-based firm is enjoying a change in fortunes after a tough few years.
In January, it agreed to pay more than $100 million to US authorities after admitting to defrauding clients during multi-billion-dollar foreign exchange transactions.
And in December, US authorities lifted the threat of prosecution against HSBC, five years after it admitted to widespread money laundering and sanctions violations.
In a landmark case, the bank agreed to pay $1.9 billion in fines in 2012, after admitting it knowingly moved hundreds of millions of dollars for Mexican drug cartels and illegally served clients in Iran, Myanmar, Libya, Sudan and Cuba in violation of US sanctions.
Under the terms of the settlement, federal prosecutors agreed to drop all charges after five years if the bank paid the fine, took remedial action and avoided committing new violations.
© Agence France-Presse
