Pre-tax profit drops 25% in Q1
HSBC has increased its provisions for bad loans, adding $202 million (£150.6 million) to its expected credit losses in the first quarter of 2025, bringing the total to $876 million (£653.3 million).
The figure came in slightly above market forecasts, with the banking giant expecting global lending to remain subdued this year due to persistent market turmoil, rising tariffs and geopolitical risks.
The bank also indicated that in a scenario with “significantly higher tariffs,” it could face a “low single-digit percentage” revenue decline and another $500 million (£372.9 million) in bad loan charges.
According to a Financial Times report, chief executive Georges Elhedery said the lender was entering “this period of economic uncertainty and market unpredictability… from a position of financial strength.”
HSBC’s pre-tax profit dropped 25% to $9.5 billion (£7.1 billion) in the first quarter, although it exceeded analysts’ projections of $9.1 billion (£6.8 billion). Profits were lower than the $12.7 billion (£9.5 billion) recorded in the same period last year, when the bank benefited from one-off gains tied to the sales of its Canadian and Argentine operations.
Net interest income fell to $8.3 billion (£6.2 billion) from $8.7 billion (£6.5 billion) a year earlier, reflecting the disposal of the Argentina business. HSBC’s net interest margin slipped by 0.04 percentage points, underlining pressure to diversify revenue streams beyond interest-based income.
Alongside its earnings update, HSBC unveiled a share buyback of up to $3 billion (£2.2 billion), set to begin following its annual meeting on May 2.
Since stepping into the CEO role in September, Elhedery has pushed a cost-reduction strategy aimed at cutting $300 million (£223.58 billion) in 2025 and $1.5 billion (£1.12 billion) annually by the end of 2026. The initiative includes operational restructuring, scaling back parts of the investment bank, and removing a management layer.
HSBC said it is reviewing its business in Malta and progressing towards the sale of its private banking unit in Germany, as well as life insurance businesses in South Africa and France. The bank also noted its holding in Bank of Communications would fall from 19% to 16% following a $16.5 billion (£12.3 billion) share sale by the Chinese lender, leading to an estimated paper loss of up to $1.6 billion (£1.2 billion).
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