London-based HSBC Holdings reported $5.8 billion in first quarter pre-tax profits on Tuesday, nearly double consensus expectations as the bank’s pivot into Asian markets begins to pay dividends.
“The execution of our growth and transformation plans is proceeding well,” HSBC permanent CEO Noel Quinn said in a statement Tuesday. “The economic outlook has improved, although uncertainties remain.”
The bank will invest $6 billion into its wealth management and banking operations across Asia over the next five years in addition to hiring more than 5,000 people in the region, Quinn announced in February.
By pivoting to asset management services in Asia particularly, the bank has for the most part fended off pressure on its lending products as a result of extended low interest rates.
“We had a good start to the year,” Quinn acknowledged. “We carry good momentum into the second quarter, while maintaining conservative positions on capital, funding, liquidity and credit.”
HSBC earned $3.9 billion in profit on a net basis in the first quarter of 2021, compared with $1.79 billion over the same period last year.
A major overhaul is underway. HSBC’s commercial banking and markets businesses, as well as its wealth and personal banking segment, have returned to sit in Hong Kong after moving to London along with the bank’s headquarters in the mid-1990s.
The bank cut junior staff bonuses by 22.5% in 2020 and reduced the entire bonus pool by 17% on average, while job cuts have been in full swing since June.
In addition, HSBC does not expect to pay quarterly dividends this year but will consider an interim dividend when reporting second quarter earnings in August.
“We expect our Asian wealth management business to have close to double digit growth by the end of the year,” Quinn said in an earnings call on Tuesday.
The bank’s global wealth and personal banking units have seen their pre-tax profit more than double in the first quarter while banking and markets segments’ share rose 74%.
At the same time, revenue fell 5% to $13 billion between January and March, while net income slid 14% to $6.5 billion.
Shares in the Hong Kong listed bank rose 2.8% on Tuesday as the earnings report was released.
Other banks in the city will report their quarterly earnings later this week.
