HONG KONG (Reuters) – HSBC Holdings said on Tuesday its quarterly profit tripled, beating expectations, as rising interest rates around the world boosted the lender’s earnings and enabled it to pay a first dividend quarterly since 2019.
Rising interest rates allowed HSBC and its Asian rival DBS to improve their balance sheets, despite the turmoil that emerged in the banking sector, mainly in the United States.
With rates approaching a cyclical peak, the challenge for banks like HSBC and DBS will be to maintain their margins in the quarters ahead.
Europe’s biggest bank posted a pre-tax profit of $12.9 billion (€11.74 billion) for the first quarter to March, up from $4.2 billion a year earlier. The results were above the average estimate of $8.64 billion from 17 analysts compiled by HSBC.
The Hong Kong-listed HSBC stock extended its initial gains and soared more than 3% in afternoon trading.
HSBC’s overall profit was supported by the reversal of a $2 billion write-down on the planned sale of its France business, reflecting the fact that the deal may no longer go ahead.
The bank had warned last month that the sale of its French business could be jeopardized due to regulatory capital problems for the buyer.
The London-headquartered bank also reported a delay in completing the sale of its Canadian business, a key part of its strategy to scale back its business in low-growth Western markets. , where it lacks scale.
HSBC has recently tried to accelerate its Asia strategy, in part to respond to calls from its major shareholder Ping An Insurance Group Co of China to split up the Asia unit to boost shareholder returns.
It announced a dividend of $0.10 per share, its first quarterly dividend since 2019, following calls from shareholders to do so.
The lender also signaled the first in a new round of share buybacks of up to $2 billion.
Despite the increase in profit, HSBC did not raise its main performance target of achieving a return on equity of at least 12% from this year, when analysts estimated that this parameter would be raised.
(Report Selena Li in Kong Kong and Lawrence White in London; Gaëlle Sheehan, editing by Kate Entringer)
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