HSBC (0005) is expected to report a pre-tax profit of US$7.83 billion (HK$61 billion) for the first quarter and announce another US$3 billion share buyback on Tuesday.
Profit before tax is projected to decline 38 percent due to the absence of gains from the sale of its Canadian operations recorded during the same period last year. On a quarter-on-quarter basis, the figure is expected to jump 2.4 times.
Market attention will also focus on the lender’s updated outlook on the economy and business prospects in light of the impact of the trade war.
HSBC’s first-quarter revenue is expected to drop by 19.7 percent to US$16.67 billion, of which net interest income from banking operations is estimated at US$10.57 billion, reflecting a year-on-year decline of 6.4 percent.
Expected credit loss, or ECL, may rise 20.6 percent year-on-year to US$868 million, though the figure is about 36.3 percent lower than the fourth quarter. Operating expenses are anticipated to increase by 3.9 percent year-on-year to US$8.47 billion.
A quarterly dividend of 10 US cents is expected to be announced tomorrow, with the full-year payout seen at 67 US cents – 1 US cent higher than last year if the special dividend is excluded.
Concerns persist over the impact of the trade war on global economic stability, potentially weighing on HSBC’s income and profitability. In a recent report, Goldman Sachs revised its forecast for the bank’s net interest income over the next three years, predicting a decline to US$41.4 billion this year.
Reflecting slower macroeconomic growth, Goldman estimates HSBC’s return on tangible equity for this year and the next at 14.4 percent, below the bank’s target of approximately 15 percent annually from 2025 to 2027.
Additionally, Goldman has raised HSBC’s ECL charges as a percentage of average gross loans forecast for this year to 46 basis points from 41 basis points, surpassing the upper end of HSBC’s guidance range by six basis points.
On Monday, HSBC said it has completed a US$2 billion share repurchase program.
STAFF REPORTER
