HSBC shares drop as first-quarter pre-tax profit misses estimates
HSBC, Europe’s largest lender, on Tuesday reported a pre-tax profit of $9.4 billion in the first quarter, missing analysts’ forecasts due to higher expected credit losses and other impairment charges.
HSBC’s revenue rose 6% year-on-year, beating forecasts, thanks to stronger wealth charge and other income.
Here’s how HSBC compares with its first quarter results consensus estimates Compiled by the bank.
- Profit before tax: $9.59 billion versus $9.37 billion
- Revenues: $18.62 billion – $18.49 billion
The lender’s first-quarter profit before tax fell 1% on an annual basis, and its shares in Hong Kong fell 3.7%.
According to HSBC, expected credit losses of $1.3 billion were $400 million higher than in the same period the previous year; This was due to exposure to a UK fiscal sponsor and provisions arising from increased uncertainty and a worsening economic outlook due to conflicts in the Middle East.
But the bank said it is on track to reduce annual costs by $1.5 billion by the end of June 2026. “Through the privatization of Hang Seng Bank, we expect to achieve $0.5 billion in pre-tax revenue and cost synergies between both our brands in Hong Kong by the end of 2028.”
HSBC completed the privatization of Hang Seng Bank on January 26, and the bank’s shares were subsequently delisted from the Hong Kong Stock Exchange.
The bank’s net interest income rose 8% annually to $8.9 billion in the first quarter; Operating expenses also increased by 8% due to the impact of inflation, exchange rate, high planned expenses and performance-related payments.
The lender highlighted risks such as high oil prices, sharp inflation and a serious slowdown in GDP arising from the Middle East conflict, and warned there could be a “mid-to-high single digit percentage” negative impact on its pre-tax profit if these factors come into play.
While HSBC maintained its target for return on tangible equity, a measure of profitability, at 17%, it warned that if the negative impact of the Middle East crisis materialises, it could bring RoTE below 17%, excluding significant items, in 2026. Annualized RoTE was 17.3% in the reported quarter.
HSBC’s board also approved an initial interim dividend of 10 cents per share for 2026.
