HSBC Profit Beats Expectations -- Update

By Margot Patrick Features Dow Jones Newswires

HSBC Holdings PLC reported a bigger-than-expected first-quarter profit Thursday, supporting investor hopes the bank could buy back more shares this year.

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Net profit for the three-month period was $3.13 billion, down from $3.89 billion in the first quarter of 2016 and higher than the $2.67 billion analysts had estimated. Adjusted profit, stripping out one-time items and taxes, rose 12% to $5.94 billion, with gains across retail banking, commercial banking and global banking and markets.

The bank's shares rose 2% in Hong Kong.

HSBC has been shedding assets to improve returns under Chief Executive Stuart Gulliver, shutting almost 100 businesses since 2011. The moves have freed up capital for other investments, but a lack of opportunities led HSBC to spend $3.5 billion in the past year buying back shares.

Analysts are expecting up to another $2 billion in stock buybacks in the second half as capital is freed from the bank's legacy U.S. consumer finance portfolio, although Finance Director Iain Mackay in an interview said there may be better things to do with the cash.

"Our preference will always be to invest capital for future growth," he said. "We will take a little pause, and consider what we see in the second quarter."

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In the U.K., a main market for the bank alongside Hong Kong, Mr. Mackay said loan demand from households and businesses is holding up despite uncertainty around the country's planned exit from the European Union.

"When you look at the economic numbers there may be some slowing but that is not manifested in customer behavior at this point in time. Right now the U.K. is trading pretty stable," Mr. Mackay said.

After years of restructuring, which included retreating from much of Latin America, HSBC is now readying to change its top leadership. In March it said Mark Tucker, CEO of insurer AIA Group Ltd., would replace Chairman Douglas Flint in October. Mr. Tucker will then start looking for a new CEO to take over from Mr. Gulliver. Mr. Gulliver said in March that he wants to retire from the bank in 2018.

Write to Margot Patrick at margot.patrick@wsj.com

(END) Dow Jones Newswires

May 04, 2017 03:05 ET (07:05 GMT)