An encouraging trading update from HSBC today: the last of the big banks to report on its Q1 performance said that revenues ‘recovered strongly’ in the first three months of 2009, as record investment banking results (particularly in Asia) offset further losses in the US. Underlying profits were apparently ‘well ahead’ of the equivalent figure in 2008 – although admittedly this was largely due to a (more-by-good-luck-than-good-management) $6.6bn profit from the rising value of its own debt. Still, the bank does seem to be benefiting from its big international franchise – it’s still in the black, even though one of its largest markets is losing money hand over fist…
The real drag on HSBC’s figures continues to be its $100bn US consumer finance division, which is currently being run down at a substantial loss – another $2.4bn was written off on dodgy loans last quarter. But although this figure was $300m more than the same period last year, it was also $600m less than the fourth quarter of last year – so at least the numbers are headed in the right direction. And HSBC was keen to point out that the rest of its Personal Financial Services arm actually finished the quarter in the black.
Better still, as far as shareholders are concerned, HSBC also said it made record pre-tax profits in Global Banking & Markets (its investment banking division, which boosted margins and market share), while its Commercial Banking arm was also ‘strongly profitable in all regions’. Like Standard Chartered (which reported record income levels last week), HSBC is profiting from its sizeable presence in Asia, where the impact of the financial crisis has been less pronounced. 'Asia remains our strongest region’, the bank admitted today.
HSBC also looks to be sitting pretty in balance sheet terms; after completing a £12.5bn rights issue last month, its core capital ratio is now at a very healthy 8.6%. Unlike some of its biggest rivals, it seems to have timed its cash call pretty well (more and more companies are now launching rights issues of their own as the market picks up – note miner Lonmin and builder Travis Perkins today).
The bank was pretty cautious about the road to recovery today, suggesting it had been surprised by the recent improvement in sentiment - according to chairman Stephen Green, mixed signals from the broader economy mean the outlook 'remains highly uncertain'. But thanks to its sprawling international presence, coupled with its newly cash-rich coffers, HSBC looks a lot better off than most....
In today's bulletin:
Centrica goes nuclear with bargain BE stake
Even civil servants face the axe, says CIPD
HSBC banks record investment banking revenues
Price trouble brewing for coffee drinkers
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