Reduced Impairments Bolster HSBC Profits
A nearly 90 percent drop in expected credit losses helped bolster HSBC profits in the first quarter of 2021.
HSBC posted $4.6 billion in profits after tax for the first quarter, according to a statement, marking an 82 percent year-on-year increase.
Reported revenues were down 5 percent to $13 billion which the bank attributed to the impact of 2020 interest rate reductions worldwide – net interest margins fell 33 basis points to 1.21 percent.
Operating expenses increased 9 percent from higher restructuring and other related costs linked to the bank's transformation program and increased tech investments.
Reduced Impairments
The bank's results were notably strengthened by a sharp decrease in expected credit losses – $400 million compared to $3 billion in the same period last year.
This was due primarily to improvement in the economic outlook compared to 2020 and a large charge related to a Singapore-based corporate exposure – likely in reference to the Hin Leong debacle last year.
«I am pleased with our revenue and cost performance, but particularly with our significantly lower expected credit losses,» reiterated HSBC group chief executive Noel Quinn. «The economic outlook has improved, although uncertainties remain. We carry good momentum into the second quarter, while maintaining conservative positions on capital, funding, liquidity and credit.»
