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07 May 2013

HSBC Holdings plc Interim Management Statement

Highlights:

  • We continued to implement our strategy to grow, simplify and restructure the Group, announcing nine transactions to dispose of or close businesses since the start of 2013, making the total 52 since the start of 2011. Consistent with our commitment to adopt global standards, we continue to take steps to de-risk our business.
  • Reported profit before tax (‘PBT’) for the first quarter of 2013 (‘1Q13’) was US$8.4bn, up 95% compared with the first quarter of 2012 (‘1Q12’). This included adverse movements of US$0.2bn on the fair value of our own debt (1Q12: US$2.6bn) and gains of US$1.1bn from disposals and the reclassification of an associate (1Q12: US$0.2m).
  • Underlying PBT for 1Q13 was US$7.6bn, up 34% compared with 1Q12. This primarily reflected higher revenue of US$0.8bn and lower loan impairment charges of US$0.9bn, with a notable improvement in our US Consumer and Mortgage Lending (‘CML’) portfolio.
  • Underlying revenue included a net gain of US$0.6bn on completion of the sale of our remaining shareholding in Ping An and a US$0.5bn favourable debit valuation adjustment on derivative contracts. Remaining revenue was broadly unchanged. We achieved revenue growth in key areas including residential mortgages and Commercial Banking in both our home markets of Hong Kong and the UK, and Financing and Equity Capital Markets.
  • Underlying operating expenses were down 2% compared with 1Q12, reflecting lower charges in respect of UK customer redress programmes and a reduction in restructuring costs. We achieved US$0.4bn of additional sustainable cost savings during the quarter.
  • Underlying cost efficiency ratio improved to 53.2% in 1Q13 from 56.9% in 1Q12.
  • Core tier 1 capital ratio was 12.7% at 31 March 2013, up from 12.3% at 31 December 2012.

Group Chief Executive, Stuart Gulliver, commented:

"We have had a good start to the year, with growth in reported and underlying profit before tax. These results demonstrate our progress in implementing the strategy we set out in May 2011.

"While continuing uncertainty in the global economy has created a relatively muted environment for revenue growth, we have increased revenue in key areas including residential mortgages and Commercial Banking in both our home markets of Hong Kong and the UK, and in our Financing and Equity Capital Markets business.

"Loan impairment charges were lower in every region, notably in North America. Our continued focus on cost management contributed to an improvement in our underlying cost efficiency ratio.

"We have achieved further progress on the journey we started in 2011 to make HSBC easier to manage and control. The implementation of global standards will help ensure that we meet the commitments we made to the US and UK authorities as part of the settlement agreements reached at the end of last year.

"Our performance in April continued the trend we saw in the first quarter. Looking at the macroeconomic environment, there are still challenges ahead. However, we expect the mainland Chinese economy to accelerate after a slower than expected start to the year; the US to continue to outperform its peers, although the pace of growth is slow compared to past standards; the eurozone to contract; emerging markets to grow at around 5% and global growth to be around 2% for 2013.

"We have strengthened our capital position and remain one of the best-capitalised banks in the world, allowing us both to invest in organic growth and grow dividends. Our strategic direction remains unchanged. Later this month we will update investors on the next phase of its implementation."

Media enquiries to:
Patrick Humphris
Tel: +44 (0) 20 7992 1631
Gareth Hewett
Tel: +852 2822 4929

Investor Relations enquiries to:
Guy Lewis
Tel: +44 (0) 20 7992 1938
Hugh Pye
Tel: +852 2822 4908

Note to editors:
HSBC Holdings plc
HSBC Holdings plc, the parent company of the HSBC Group, is headquartered in London. The Group serves customers worldwide from around 6,600 offices in over 80 countries and territories in Europe, Hong Kong, Rest of Asia-Pacific, North and Latin America, and the Middle East and North Africa. With assets of US$2,681bn at 31 March 2013, HSBC is one of the world’s largest banking and financial services organisations.

Read the full media release.

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