Shares of HSBC Holdings plc (LON: HSBA) are down 4.0% on Tuesday after the bank reported a significant annualised decline in its Q1 profit on more provisions for credit losses due to the Ukraine war.
Notable figures in HSBC Q1 earnings report
At $2.80 billion, net profit tanked 28% from last year’s $3.88 billion.
Revenue slid 4.0% YoY to $12.46 billion in the recent quarter.
Net interest margin climbed 7 bps sequentially to 1.26%.
$642 million net charge for bad loans versus $435 million of net release a year-ago.
Continues to forecast a 5.0% growth roughly in revenue this year.
HSBC expects net interest income to benefit from higher rates and sees a mid-single-digit growth in lending in fiscal 2022, as per the earnings press release. The stock is now down 20% from its high in early February.
CFO Stevenson’s remarks on CNBC
According to the British multinational, the Ukraine war has worsened inflationary pressures and COVID restrictions in Hong Kong weighed on the Wealth business this quarter. Still, on CNBC’s “Capital Connection”, CFO Ewen Stevenson said:
We are very pleased with the results. Good top line growth, we’ve started to see benefit of rising rates coming through. This is our best net interest margin since the first half of 2020. And costs are under control. We took costs down 2.0% year on year.
A 100 bps increase in interest rates translates to a $5.0 billion in additional net interest income for HSBC, he confirmed.
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