economy
HSBC shares drop as first-quarter pre-tax profit misses estimates on higher expected credit losses
Europe's largest lender HSBC on Tuesday reported first-quarter pre-tax profit of $9.4 billion, marginally missing analysts' estimates.
TL;DR
- HSBC's first-quarter pre-tax profit was $9.4 billion, below analysts' estimates of $9.59 billion.
- Revenue for the quarter was $18.62 billion, exceeding estimates of $18.49 billion.
- Expected credit losses rose to $1.3 billion, $400 million higher than the previous year, attributed to fraud exposure and Middle East conflict uncertainty.
- HSBC is on track for $1.5 billion in annualized cost reductions by June 2026 and expects synergies from Hang Seng Bank privatization.
- Net interest income rose 8% year-on-year, while operating expenses also increased by 8%.
- The bank warned that the Middle East conflict could negatively impact profit before tax by a mid-to-high single-digit percentage.
- HSBC maintained its target return on tangible equity (RoTE) of 17% but cautioned it could fall below this if adverse Middle East impacts materialize.
- The board approved an interim dividend of 10 cents per share for 2026.