HSBC profits nearly double as costs and bad debts fall
By Steve Slater
LONDON (Reuters) - HSBC (HSBA.L: Quote) aims to keep the pressure on costs after first-quarter earnings nearly doubled due to the bank's three-year efficiency drive and a halving in bad debts charges.
The jump in profits reinforces HSBC's position as one of the strongest global banks after the financial crisis partly as a result of a radical overhaul to simplify its sprawling structure and improve profitability.
Its strong focus on Asia, which generated around two-thirds of profit in the first quarter, has also helped offset a harsh business environment, particularly in the euro zone.
Europe's largest bank moved faster and more aggressively than many of its peers to cut costs after the crisis. And it will continue to wield the knife - with a further 6,000 job cuts expected this year from businesses already put up for sale, on top of 40,000 already culled. HSBC has closed or sold more than 50 businesses since 2011.
"We're moving into calmer waters but there are still challenges ahead," Chief Executive Stuart Gulliver told reporters on a conference call.
Gulliver declined to say whether he would announce any additional cost savings at a strategy update for investors on May 15. But he said: "Clearly you can expect us to continue to focus on our cost base."
The CEO said HSBC still expected the euro zone economy to contract during 2013 and that UK economic growth remained muted.
Across Europe, HSBC's smaller rivals are playing catch-up with cost cuts to help offset rising bad debts and weak loan demand. French banks Societe Generale (SOGN.PA: Quote) and Credit Agricole (CAGR.PA: Quote) on Tuesday said they would keep making cuts to cope with a weak domestic economy. Continued...