20 September 2019
HSBC will decide in a few months on possible relocation of its global headquarters, Chief Executive Stuart Gulliver said on Tuesday. Photo: HKEJ
HSBC will decide in a few months on possible relocation of its global headquarters, Chief Executive Stuart Gulliver said on Tuesday. Photo: HKEJ

HSBC first-quarter pretax profit up 4%, beating forecasts

HSBC Holdings (00005.HK) reported a 4 percent jump in pretax profit for the first quarter of 2015, beating market expectations, on the back of improved investment banking operations.

Europe’s largest bank announced Tuesday that its profit before tax for the three months to March came in at US$7.05 billion, while adjusted pretax profit — which factors in foreign currency translation differences — was up 5.3 percent at US$6.89 billion.

Net profit increased by 0.9 percent to US$5.25 billion.

The global banking and markets division was the biggest profit contributor, as it swung to profit after a loss in the preceding three months.

The division’s pretax profit grew by almost 6 percent to US$3.04 billion from a year earlier, making it the best performing segment.

Meanwhile, the retail banking and wealth management and the commercial banking business, which together accounted for about 55 percent of the total profit, saw its pretax profit decline by around 5 percent compared with last year.

Chief Executive Stuart Gulliver said that the business performance was in line with the bank’s expectation and that the first-quarter saw stable credit quality in all the main markets.

Asked whether the bank will relocate its global headquarters out of London following a jump in tax costs in the UK, Gulliver said a decision will be made within months.

HSBC will announce an evaluation method of the headquarters at an investor meeting on June 9. The final result is expected to be submitted to the board by the end of the year.

Gulliver said he is confident that the Hong Kong Monetary Authority will be able to regulate the banking giant if it decides to relocate to Hong Kong.

“I do think the HKMA is qualified to regulate HSBC… they are regulating about 80 percent of the profit of the group already and have been doing it for many years,” Gulliver said during a post-results teleconference.

Hong Kong is widely believed to be HSBC’s top choice for relocation as the bank was domiciled in the city when it was founded in 1865 until it moved its headquarters to London in 1992.

In other comments, Gulliver said that the Swiss banking scandal – in which HSBC’s private banking unit was accused of helping clients dodge taxes in their home countries — did not affect the bank’s business significantly, though it caused some “reputational damage”.

Asia continued to be the growth driver for HSBC in the first quarter, with profit before tax in the region rising 15 percent at US$4.33 billion.

Pretax profit of the Hong Kong operation was up 31.5 percent at US$2.77 billion. 

In early trading in Hong Kong Wednesday, HSBC shares were down 0.8 percent at HK$74.2, while the market’s benchmark Hang Seng Index was 0.2 percent lower.

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EJ Insight reporter