HSBC Branch was in London, UK on January 15, 2024. HSBC PLC is a UK multinational banking and financial services organization. HSBC International Network has approximately 7,500 offices in more than 80 countries around the world. (Photo by Mike Kemp/image via Getty in the picture)
Mike Kemp | in pictures | Getty Images
Europe's largest lender, HSBC (HSBC), estimated the good performance of its wealth business and the strength of its corporate and institutional banking sectors in the first quarter of Tuesday.
The bank also announced a stock buyback of up to $3 billion, which intends to be completed before announcing temporary results for 2025.
Compared with the consensus estimate compiled by the bank, this is the first quarter of HSBC's results in 2025.
The bank's pre-tax profit fell 25% year-on-year, while revenue fell 15% from last year. However, pre-tax profit soared nearly 317% from the previous quarter.
"Our outstanding results this quarter demonstrate our revenue momentum, discipline in implementing strategies and confidence in our ability to achieve our goals," said Georges Elhedery, CEO of HSBC Group.
However, the bank warned that the growth of macroeconomic uncertainty underscores the adverse effects of protectionist trade policies on consumer and business sentiment.
"Despite uncertainty about global trade, HSBC's restructuring progress should continue to have a positive impact on cost savings," said DBS Bank equity research analyst Manyi Lu.
Lu told CNBC that there could be some headwinds of tariffs and concerns about a global recession, but the impact would be even more prominent.
These revenues do not reflect the full impact of tariffs by U.S. President Donald Trump, whose “reciprocity” taxes announced in April have been suspended. However, tariffs on steel, aluminum and cars have been reached since March.
Lu added that due to tariff uncertainty, investors should be careful whether banks will lower their guidance in the future. "The impact will depend on how the tariffs in ASEAN countries will proceed after a 90-day grace period," she said.
Michael Makdad, senior equity analyst at Morningstar, said the additional $3 billion buyback was greater than Morningstar’s expected $2 billion figure. The bank also had a better result than he expected.
According to Sky News, the British bank chief executive is Elhedery who once urged the Treasury Prime Minister to abolish the country's fence rules. The fence involves isolating the bank’s consumer banking business from the more risky investment banking activities.
Last October, HSBC announced a restructuring plan to split its operations into four divisions, creating separate “Eastern Market” and “Western Market” divisions. HSBC has said this year's restructuring will bring about $300 million in cost reduction.
However, it expects severance and other upfront costs of $1.8 billion in 2025 and 2026.
HSBC shares rose 1.5%.