HSBC first quarter profits are 'well ahead' of last year
May 12 2009 by Iain Laing, The Journal
HSBC has hailed a "resilient" start to 2009 as record investment banking results helped give another shot-in-the-arm to the stricken sector.
The group, which has so far avoided turning to the Government for rescue cash, said first quarter pre-tax profits were “well ahead” on a year earlier, although figures were boosted by one-off gains. Profits with these gains stripped out were lower than a year ago, but marked a significant improvement on the final three months of 2008, according to HSBC.
It also saw better-than-feared bad debts at its troubled US consumer lending business HSBC Finance, despite racking up another £2.6bn in impairment charges.
The bank is also cutting costs through job losses. It axed 500 in September and another 1,200 in March, but it says there has been no reduction to its 500-strong staff in the North East and none is planned.
Although it opened a new £2.8m headquarters for its North East commercial operation in September, the bank has downgraded the centre from a regional headquarters to an area headquarters, which now reports to the remaining two North regional centres in Leeds and Manchester.
Currency trading and a buoyant bond market have helped investment bank returns in recent months, with Barclays posting a 15% increase in first quarter profits largely due to its Barclays Capital arm.
The bond market revival has also helped increase the value of banks’ own corporate debt – the factor behind HSBC’s year-on-year profit rise.
But Michael Geoghegan, chief executive, warned investment banking operations were unlikely to sustain the results seen so far this year and said there may be further restructuring due in the commercial banking sector.
