Today HSBC Holdings plc (LON: HSBA) announced that its first-quarter net profit grew 100% year-over-year. The company attributed the increase to an improvement in its financial outlook, which allowed it to release funds it had earmarked for expected credit losses. Chief Financial Officer Ewen Stevenson said:
“We are still relatively cautious and hold around 70% of our reserves that were built up last year.”
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HSBC shares opened at 423 pence on the stock exchange today and are currently trading 433 pence higher. By comparison, Europe’s largest bank started the year at 380 pence a share after recovering from 283 pence a share in the last week of September 2020.
HSBC reports revenue of £ 9.36 billion
HSBC said its first-quarter net profit was 2.79 billion pounds. During the corresponding quarter last year, net profits were limited to £ 1.29 billion. Expected credit losses decreased sharply in the first quarter to 288.12 million pounds compared to 2.16 billion pounds in the first quarter of the previous year.
HSBC valued its first-quarter revenue at £ 9.36 billion, which was down 5.0% year-over-year. The investment bank explained the decline in low interest rates in recent months due to the ongoing outbreak of the Covid-19 pandemic, which has so far infected more than 4.4 million people in the United Kingdom and caused the death of more than 127,000 people.
For the entire year, the Financial Holding Company now expects to increase consumer lending by about 5%. HSBC reiterated that it is unlikely to resume dividend payments this year. In February, the London-based bank reported that its revenues were down 35% in 2020 due to the pandemic.
Comments by CEO Noel Quinn
CEO Noel Quinn commented on the financial update today saying:
“We are more optimistic than we were in February, and we expect GDP to recover in every economy in which we operate this year.”
In a separate news from the UK Hotel and restaurant company Whitbread plc announced this They incurred a pre-tax loss during fiscal year 2021 due to the covid-19 disruptions.
HSBC has performed relatively poorly in the stock market last year with an annual decline of around 35%. At the time of writing, the company has a net worth of £ 87.81 billion and a price-to-earnings ratio of 31.06.