HSBC almost doubles pre-tax profit

Cost cutting main reason for jump to US$8.4 billion in Q1.

Britain’s and Hong Kong’s largest bank saw its pre-tax profits rise 95% year-on-year on the back of lower costs and impairment charge. HSBC said its costs fell to US$9.3 billion, US$1 billion lower year-on-year. Revenues improved 14% to US$18.4 billion.

The rise in profits was also helped by a fall in bad debt charges across HSBC’s global business, and the results of a cost reduction program that has led HSBC to fire more than 30,000 employees.

Losses from bad debts dropped 51% to US$1.2 billion as the bank cut costs and sold off businesses to recover from the financial crisis. The bank sold 52 businesses in the last two years.

CEO Stuart Gulliver said the bank had moved into calmer waters but warned there were still challenges ahead as he pointed to further cost cuts that are likely to see thousands more staff lose their jobs. He said the bank had exceeded its annual cost savings target of US$3.5 billion.

"We have had a good start to the year, with growth in reported and underlying profit before tax. . . While continuing uncertainty in the global economy has created a relatively muted environment for revenue growth, we have increased revenue in key areas including residential mortgages and Commercial Banking in both our home markets of Hong Kong and the UK, and in our Financing and Equity Capital Markets business."

About half of HSBC’s profits came from its global banking business, which reported a pre-tax profit for the quarter of US$3.59 billion, up US$500 million year-on-year.