On the cost front, loan impairment costs across global banking and markets, retail banking and wealth management and CMB rose by $600m than in the first quarter of 2015. While total operating expenses, at £3.8bn were 7% lower than the previous year.
“This reduction in reported expenses was largely driven by the favourable effects of currency translation of $0.6bn between the periods,” the firm said.
Laith Khalaf, senior analyst at Hargreaves Lansdown said while current markets have been tough for banks, things weren’t quite as bad for HSBC as many had feared.
“One of the headwinds HSBC has been battling is a deterioration of its loan book, with impairment costs doubling from last year, led by problems with borrowers in the energy and mining sectors. Nonetheless HSBC declared an unchanged dividend of 10 cents, which was twice covered by earnings over the quarter. Investors are clearly concerned on this front though, because a 7.5% yield on the stock suggests the market is sceptical the dividend can be maintained.
But, he added: “It is still very much work in progress at HSBC as the bank is engaged in a major repositioning, which will see it become much more focused upon its Asian roots and far less exposed to volatile investment banking activities. While currently problematic, the focus on Asia could prove rewarding in the long term, if HSBC executes its strategy well.”
