HSBC's Q1 Pre-Tax Earnings Decline on Lower Revenues and Higher ECL

HSBC Holdings HSBC reported first-quarter 2025 pre-tax profit of $9.48 billion, which declined 25% from the prior-year quarter.

Results were affected by a fall in revenues, higher expected credit losses and other credit impairment charges (ECL), partially offset by a fall in expenses.

HSBC’s Revenues Fall, Expenses Dip

Total revenues were $17.65 billion, down 15% year over year. The fall was primarily due to lower net interest income (NII) and other operating income.

Operating expenses declined marginally to $8.1 billion. 

In the quarter under review, ECL was $876 million, up 21.7% year over year.

The common equity tier 1 (CET1) ratio, as of March 31, 2025, was 14.7%, down from 15.2% as of March 31, 2024. The leverage ratio was 5.4%, down from 5.7% in the prior-year quarter.

HSBC’s Quarterly Performance by Business Lines

The Hong Kong Business: The segment reported $2.54 billion in pre-tax profit, up 9.8% from the year-ago period. The rise was driven by an increase in total revenues.

The UK Business: The segment reported a pre-tax profit of $1.55 billion, down 6.3% from the year-ago quarter. Higher ECL charges and a rise in expenses resulted in the decline.

Corporate and Institutional Banking: Pre-tax profit was $3.52 billion, which increased 10.9% year over year. The jump was driven by higher total revenues and lower ECL charges.

International Wealth and Premier Banking: Pre-tax profit was $1.19 billion, which declined marginally year over year. The fall was due to higher ECL charges.

Corporate Centre: The segment reported a pre-tax profit of $682 million, down from $4.2 billion in the year-ago quarter.

Our View on HSBC

HSBC’s strong capital position, relatively higher interest rates, a global network and business simplification initiatives will continue to support its financials. However, higher expenses and subdued revenues on weak loan demand are concerns.

HSBC Holdings plc Price, Consensus and EPS Surprise

HSBC Holdings plc price-consensus-eps-surprise-chart | HSBC Holdings plc Quote

Currently, HSBC carries a Zacks Rank #3 (Hold). You can see the complete list of today's Zacks #1 Rank (Strong Buy) stocks here.

Performance of Another Foreign Bank

ICICI Bank Ltd.’s IBN net income for the fourth quarter of fiscal 2025 (ended March 31) was INR126.3 billion ($1.5 billion), up 18% from the prior-year quarter. (Find the latest EPS estimates and surprises on Zacks Earnings Calendar.)

IBN’s results were driven by a rise in NII, non-interest income and growth in loans and deposits. However, higher operating expenses and provisions were headwinds.

An Upcoming Foreign Bank Earnings Release

UBS Group AG UBS is scheduled to release first-quarter 2025 earnings on April 30.
 
UBS’ quarterly earnings estimates have remained unchanged at 42 cents over the past week.

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