Banking giant HSBC has notched up a near-80% surge in profits as it cheered a brighter UK and global economic outlook and cut reserves for loan losses.
The group delivered better-than-expected pre-tax profits of 5.8 billion US dollars (£4.2 billion) for the first quarter – up 79% on the same period last year.
London-headquartered HSBC said it made solid earnings in all regions, with its UK business notching up a pre-tax profit of more than 1 billion dollars (£720 million) – more than the division made throughout the whole of 2020.
Chief executive Noel Quinn said the UK’s vaccination programme had helped put Britain’s economy on course for a sharp rebound this year and next.
He also praised the Government’s massive support efforts for helping businesses and households through the worst of the pandemic.
The improved outlook for the UK and the wider world economy saw it cut the loan losses it expects from struggling businesses, releasing 435 million US dollars (£313 million) of reserves put by for bad debts.
A year earlier, the bank set aside more than 3 billion US dollars (£2.2 billion) for loan losses, with the hefty charges sending profits tumbling 34% in 2020.
Mr Quinn said: “We are feeling more optimistic about the rest of the year than we did at the full-year (results), but remain cautious about the uncertainties that remain.
“It’s still early days but we’re carrying good momentum into the second quarter.”
He added the next few months may prove to be “unpredictable” as government support begins to be withdrawn, while the group added that it remains cautious over the potential for Covid-19 variants to throw the vaccination programme off course.
Results showed its revenue fell 5% to 13 billion dollars (£9.37 billion), with the bank adding this was due to the impact of 2020 interest rate reductions in global businesses.
Europe’s largest lender said there would be no quarterly dividend as previously announced in the 2020 annual results, but an interim dividend would be considered ahead of the half-year results in August.
The group is in the middle of a turnaround that will see it axe 35,000 jobs worldwide as part of aims to cut its annual costs by 5.5 billion US dollars (£4 billion).
Mr Quinn said it continues to keep its bank branch estate “under review” in the UK after it announced in January that it would close 82 sites due to the shift to online banking.
The group is overhauling its remaining UK branches into four different formats – full service, cash service, digital service and pop-up sites – and said it was “monitoring” how the re-jig was working.
Separately on Tuesday, TSB said it was launching 43 pop-up services across the UK following recent sites being shut, with the first 18 opening in April.