HSBC profits almost double to $8.43 billion

Europe's largest bank HSBC Holdings Plc, said its first-quarter profit almost doubled, beating estimates of analysts, as bad debts declined, and it cut costs.

Pretax profit was up at $8.43 billion against $4.32 billion in the year-earlier period, according to the statement of the London-based bank.

HSBC Holdings Plc chief executive officer Stuart Gulliver had closed or sold at least 52 businesses after taking up the top job in 2011, cutting 30,000 jobs and sacrificing revenue to improve profitability.

Finance director Iain Mackay said in March that there was room for a further $1 billion in savings this year. The company had surpassed the target it had set in 2011 and eliminated $4 billion of costs.

The company said in the statement that the lender had strengthened its capital position and remained one of the best-capitalised banks in the world, allowing it to invest both in organic growth and grow dividends, the company said in the statement.

Operating expenses were down to $9.3 billion, from $10.4 billion, while bad loan charges were down 51 per cent to $1.17 billion, the company said.

HSBC took a $243 million charge on the value of its own debt in the quarter as against $2.64 billion in 2012. The so-called credit valuation adjustments require banks to book losses when the value of their debt rose, and gains when the valued declined, on the theory that a loss, or profit, would be realised if the bank was to repurchase that debt.

Excluding the debt charge, pretax profit was up 34 per cent at $7.59 billion, while net income was up at $6.2 billion against $2.4 billion.

Gulliver said, HSBC had had a good start to the year, with growth in reported and underlying profit before tax, adding that the results demonstrates the lender's progress in implementing the strategy it set out in May 2011.

He said, while continuing uncertainty in the global economy had created a relatively muted environment for revenue growth, the bank had increased revenue in key areas, including residential mortgages and commercial banking in both its home markets of Hong Kong and the UK, and in its financing and equity capital markets business.

On a macro-economic level, Gulliver expects the mainland Chinese economy to accelerate following a slower than expected start to the year - with the US continuing to outperform its peers - but at a slower pace of growth than in the past. He expects the euro zone to contract, while emerging markets would grow at around 5 per cent and global growth would be around 2 per cent for 2013.