HSBC says April activity muted after first-quarter profit drop
By Steve Slater
LONDON (Reuters) - HSBC's (HSBA.L: Quote) first-quarter pretax profit fell 20 percent from a year ago to just under $7 billion, as revenue dropped in Brazil and at its investment bank, while last year's earnings were swelled by asset sales.
Europe's biggest bank, which operates across 75 countries, said revenue prospects were decent in Asia but weaker in Latin America, where it has retreated from many markets after a difficult few years.
"Latin America is under a bit of pressure, particularly in Brazil. Overall Asia remains broadly constructive and everywhere else is generally stable," Finance Director Iain Mackay told analysts and reporters on a conference call.
Earnings in Latin America fell to $310 million in the quarter, down a third from a year ago despite a 17 percent drop in losses from bad debts there.
Chief Executive Stuart Gulliver has said he is in the second phase of a turnaround aimed at making his bank less complex, more nimble and efficient and able to deliver better returns and dividends for shareholders.
HSBC's cost-efficiency ratio was 55.7 percent in the first quarter, close to its target of mid-50s, but its return on equity slipped to 11.7 percent, below its target of between 12 and 15 percent.
HSBC's London-listed shares were down 1.4 percent by 6:50 am ET (1050 GMT). Its shares are down 10 percent this year, underperforming a 2 percent rise by European banks as a whole .SX7P.
"There are good bits going on in Asia, but not as good as they once were, and there's revenue stability in Europe, but revenue falls in Latin America and still a bit of a drag from run-off portfolios," said Alex Potter, analyst at Mirabaud Securities in London. Continued...