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Dow Jones Newswires: HSBC first-quarter profit drops 28%

Corrections & Amplifications

This headline was corrected at 00426 GMT. The original was missing the words credit release.

HSBC Holdings PLC’s
HSBC,
-3.17%

HSBA,
-4.03%

first-quarter net profit declined 28% due to a net charge for expected credit losses and lower revenue, although the revenue outlook is positive thanks to rising interest rates.

Net profit fell to $2.80 billion in the quarter, down from $3.88 billion in the same period last year, the Asia-focused lender said Tuesday.

“I’m encouraged by our start to the year,” Chief Executive Noel Quinn said in a statement. “Our strategy is on track, with organic growth and good momentum across most parts of the group.”

The Russia-Ukraine war has heightened inflationary pressures and added uncertainty to the economic outlook, leading HSBC to set aside more provisions against bad loans. It reported a net charge of $642 million for the quarter, compared with a net release of $435 million a year earlier.

Revenue slipped 4% to $12.46 billion, compared with $12.99 billion in the year-earlier period, mainly due to weakness in its wealth and personal-banking segment. Its net interest margin rose 7 basis points from the fourth quarter, to 1.26%.

The revenue outlook is positive, as growth in net interest income is expected to continue given that the market is expecting more favorable policy-rate movements, while lending growth this year is forecast to expand by a mid-single-digit percentage, it said.

Write to Clarence Leong at clarence.leong@wsj.com

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