The London and Hong Kong-based bank is planning to cut staff by about 35,000 to drive down costs.
HSBC Holdings Plc earnings more than doubled in the first quarter as credit losses were reversed and the lender returned to profit in Europe and the U.S.
Adjusted pretax profit rose to $6.4 billion in the three months through March, beating a consensus estimate of $4.3 billion, the London-based lender said on Tuesday.
“Global Banking and Markets had a good quarter, and we saw solid business growth in strategic areas, including Asia wealth and trade finance, and mortgages in Hong Kong and the U.K.,” Chief Executive Officer Noel Quinn said in a statement.
Easing credit losses helped it turn around its U.K. business and it also posted a profit in the U.S. even as it embarks on shifting billions of dollars to Asia. Weighed down by low interest rates, HSBC is seeking out more fee-based income, targeting to become a leader in wealth management in an increasingly affluent Asia.
HSBC’s shares rose 2.7% to HK$46.30 as of 1:20 p.m. in Hong Kong.
Asia continued to be its biggest profit center, but earnings there were relatively unchanged from a year earlier. It saw big jumps in profit at all of its major divisions.
The bank has unveiled one of the most radical responses to the pandemic that emerged early last year, with plans to cut its workforce by about 35,000 to drive down costs. Even so, expenses rose in the period, driven higher by restructuring charges and performance-related pay.
But with the virus starting to be contained in major markets, HSBC was helped by a $400 million reversal in credit losses. In 2021, such losses are now seen below the medium-term range of 30 basis points to 40 basis points of average loans it indicated at its latest annual results, the lender said.
The bank said that it’s continuing negotiations on a potential sale of its retail operations in France. In the U.S., it’s exploring “both organic and inorganic options for our retail banking franchise,” according to the bank.
As part of its pivot to Asia, HSBC confirmed this month that three of its top executives would relocate to Hong Kong, meaning that most of the bank will be run from the region on a day-to-day basis.
”We will increasingly run the bank as a dual-hub model across Hong Kong and London,” Chief Financial Officer Ewen Stevenson said in a Bloomberg Television interview.” “Shifting more capability to Asia is a clear strategic priority.”
The overhaul has met local resistance. Some senior executives in Greater China worry their push into the world’s second-largest economy could be slowed by added bureaucracy and blurred reporting lines, Bloomberg News has reported.
Stevenson denied the clash on Tuesday, saying the region is very supportive of the move.
HSBC has also spent the past year adapting its working practices as a result of the pandemic. Quinn said this month that he would turn the entire executive floor of the London HQ into meeting rooms, and the bank eventually aims to cut its office space by about 40%.
It revealed on Tuesday that it aims to cut its global office footprint by about 20% already this year.