HSBC today reported a massive fall in losses, with bad debts down 51% to $1.2bn over the last three months. Profit stands at £5.4bn, smashing the £2bn first-quarter profit reported by rival Lloyds and the measly £826m over at RBS.
The most notable falls in loan impairment charges have been over in the US. Most of the toxic loans have finally been flushed out of the system and 2013 will be a bumper year for HSBC Stateside, says the company statement. Even HSBC’s business in China, which suffered as the economic powerhouse’s growth slowed, is strengthening. It’s a land of eastern promise once more.
Stuart Gulliver, who took over as CEO of HSBC back in 2011, can take much of the credit for this profit renaissance. His aggressive restructuring plans have seen the bank streamline operations, reduce complexity and cut divisions that were unprofitable, saving around $3.6bn.
Under his stewardship, HSBC has sold or closed 52 businesses in total. More than 42,000 jobs have also been axed in the past two years. And there are still 10 more non-core businesses to be sold this year and next, says Gulliver, and a further $1bn in cost savings to be made.
According to latest figures from the bank, costs in the first quarter are down 10% on last year, and now consist of about 53% of income. The bank is aiming to get the percentage below 52% by the end of the year. ‘We have strengthened our capital position and remain one of the best-capitalised banks in the world, allowing us both to invest in organic growth and grow dividends,’ reads the statement from HSBC.
These profit figures are significantly higher than many analysts had forecast, driving HSBC shares up almost 3% in morning trading.