Yahoo Finance HSBC Q1 Pre-Tax Earnings Up on Higher Revenues, Costs Rise
HSBC Holdings HSBC recorded first-quarter 2019 pre-tax profit of $6.2 billion, up 30.7% year over year. This increase was due to rise in revenues.
During pre-market trading, the company’s shares gained 2.6% on the NYSE. Notably, the actual picture will emerge after the full-day trading session.
Results benefited from an improvement in revenues. However, rise in operating expenses because of the company’s continued investments in growth programs acted as a headwind.
Revenues Improve, Expenses Rise
Adjusted total revenues of $14.4 billion grew 9.2% year over year. The upswing mainly reflects higher net interest income, partially offset by decline in net fee income.
Adjusted total operating expenses rose 3.2% from the prior-year quarter to $8.1 billion. This underlines rise in investments for business growth programs.
Quarterly Performance by Business Lines
Retail Banking and Wealth Management: The segment reported $2.2 billion in pre-tax profit, up 21% year over year. This upside was driven by higher revenues and lower operating expenses.
Commercial Banking: The segment reported pre-tax profit of $2 billion, down 4.6% from the year-ago quarter. This decline was due to rise in operating expenses, partly offset by higher revenues.
Global Banking and Markets: Pre-tax profit of $1.5 billion for the segment decreased 13.2% from the prior-year quarter. This decrease was primarily due to higher operating expenses and lower revenues.
Global Private Banking: Pre-tax profit for the segment was $96 million compared with pre-tax profit of $70 million in the year-ago quarter. The improvement was largely due to declining expenses.
Corporate Centre: The segment reported pre-tax profit of $396 million against pre-tax loss of $990 million in the prior-year quarter. Increase in revenues and lower expenses were largely responsible for the improved performance.
Capital Ratios Deteriorate
Common equity Tier 1 ratio (transitional) as of Mar 31, 2019, was 14.3%, down from 14.5% as of Mar 31, 2018. Further, leverage ratio was 5.4%, down from 5.6% as of Mar 31, 2018.
Our Viewpoint
By disposing of unprofitable/non-core operations, HSBC has been successful in enhancing efficiency. However, weak European economy, low loan demand, Brexit-related uncertainty and litigation expenses will continue to curb the bank’s near-term growth.
HSBC Holdings plc Price, Consensus and EPS Surprise
HSBC Holdings plc Price, Consensus and EPS Surprise | HSBC Holdings plc Quote
Currently, HSBC carries a Zacks Rank #4 (Sell).
You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Performance & Expected Earnings Dates of Other Foreign Banks
Barclays BCS reported first-quarter 2019 net income attributable to ordinary equity holders of £1.04 billion ($1.36 billion). This reflects improvement from net loss of £764 million ($1.01 billion) incurred in the prior-year quarter.
The Toronto-Dominion Bank TD is expected to report results on May 23 and Bank of Montreal BMO is slated to report numbers on May 29.
Today's Best Stocks from Zacks
Would you like to see the updated picks from our best market-beating strategies? From 2017 through 2018, while the S&P 500 gained +15.8%, five of our screens returned +38.0%, +61.3%, +61.6%, +68.1%, and +98.3%.
This outperformance has not just been a recent phenomenon. From 2000 – 2018, while the S&P averaged +4.8% per year, our top strategies averaged up to +56.2% per year.
See their latest picks free >>
Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report
Bank Of Montreal (BMO) : Free Stock Analysis Report
HSBC Holdings plc (HSBC) : Free Stock Analysis Report
Barclays PLC (BCS) : Free Stock Analysis Report
Toronto Dominion Bank (The) (TD) : Free Stock Analysis Report
To read this article on Zacks.com click here.
Zacks Investment Research
