Profits up, costs up for HSBC
(11 May 2011 − Global) Both costs and profits increased in HSBC’s first-quarter results with a net profit of US$4.15 billion (A$3.85 billion).
The net profit is up 58 percent from the US$2.63 billion result for the same time last year, this was driven by revenues from Hong Kong and elsewhere in Asia.
HSBC said underlying pre-tax profit, fell 10 percent from a year earlier to US$5.5billion. Recognition of deferred tax assets in the US sent the bank's tax bill tumbling to US$491 million from US$2.81 billion a year earlier, when it was hit by a big tax bill linked to the sale of a Canadian business.
The bank's ratio of costs relative to income hit 60.9 percent in the first quarter, compared with 58.9 percent in the fourth quarter of 2010, and up from 49.6 percent a year earlier.
The jump was due to investment in fast-growing markets and staff costs in competitive environments such as Asia and Latin America, the bank said.
A US$440 million provision against claims that the company improperly sold payment-protection insurance drove up costs in the latest quarter.
In geographic terms, growth was strongest in Asia, Latin America and the Middle East.
In the US, the bank signalled greater worries about the economic recovery and housing prices. HSBC booked a US$400 million charge in its US division in the quarter as a result of a halt in its foreclosures and the anticipated slowdown in the flow of cash from sales of foreclosed properties.
New chief executive Stuart Gulliver seeks to refocus the bank’s sprawling operations with a strategic plan to follow the results.
'I don't think we are at an ideal business mix,' Mr Gulliver said during a conference call.
'I want to see a shift in revenue in the group toward the emerging markets, but I don't want to do that (by) simply making less in the developed world," he concluded.
HSBC said underlying pre-tax profit, fell 10 percent from a year earlier to US$5.5billion. Recognition of deferred tax assets in the US sent the bank's tax bill tumbling to US$491 million from US$2.81 billion a year earlier, when it was hit by a big tax bill linked to the sale of a Canadian business.
The bank's ratio of costs relative to income hit 60.9 percent in the first quarter, compared with 58.9 percent in the fourth quarter of 2010, and up from 49.6 percent a year earlier.
The jump was due to investment in fast-growing markets and staff costs in competitive environments such as Asia and Latin America, the bank said.
A US$440 million provision against claims that the company improperly sold payment-protection insurance drove up costs in the latest quarter.
In geographic terms, growth was strongest in Asia, Latin America and the Middle East.
In the US, the bank signalled greater worries about the economic recovery and housing prices. HSBC booked a US$400 million charge in its US division in the quarter as a result of a halt in its foreclosures and the anticipated slowdown in the flow of cash from sales of foreclosed properties.
New chief executive Stuart Gulliver seeks to refocus the bank’s sprawling operations with a strategic plan to follow the results.
'I don't think we are at an ideal business mix,' Mr Gulliver said during a conference call.
'I want to see a shift in revenue in the group toward the emerging markets, but I don't want to do that (by) simply making less in the developed world," he concluded.
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