HSBC reported more than three times higher earnings in the first quarter, outperforming the market, driven by high interest rates. The result led the group to announce its first dividend to shareholders since 2019.
Reports released on Tuesday by HSBC and Asian rival DBS signal that aggressive interest-rate-raising policies in several economies have boosted profit margins in the financial sector, although they have also triggered sector turmoil with banking collapses in the US and in Europe . On Monday, authorities bought out US First Republic Bank and sold its assets to JPMorgan Chase in a deal to resolve the biggest US banking meltdown since the 2008 international financial crisis.
With the rate-hiking cycle nearing its peak, the challenge for HSBC, Europe’s largest bank, and its peers will be to sustain margins this year and beyond.
HSBC Chief Executive Officer Noel Quinn said the results showed the bank’s strength in the high-interest-rate scenario, and downplayed the risks of increased contagion from the sector’s crises.
“We don’t believe there is a global banking crisis on the horizon. We don’t see any negative impact on our business” following the First Republic Bank bailout, Quinn said on a conference call with analysts.
HSBC earned pre-tax income of $12.9 billion in the first quarter, compared to $4.2 billion a year earlier. The market, on average, had expected a positive result of $8.64 billion, according to an average of 17 analyst forecasts compiled by the bank.
Source: Terra
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