HSBC triples profit, defies crisis

HSBC CEO Noel Quinn has rejected the possibility of a new banking crisis, following the collapse of four banks in six weeks. Quinn attributed the recent failures to poor risk management by the banks, rather than systemic issues across the banking sector. The latest collapse saw JP Morgan acquire most of First Republic in a $10.6bn deal, as part of regulators’ efforts to bring the banking sector back to stability.

Quinn added that HSBC’s tripled Q1 profits of $13bn, compared with $4.2bn the previous year, demonstrated that there was no global banking crisis looming. The bank’s performance was boosted by higher interest rates and the reversal of plans to write off $2.1bn linked to the now-uncertain sale of its French business. The bank also benefited from its acquisition of Silicon Valley Bank UK, which increased profits by about $1.5bn.

However, concerns were raised regarding bonus payouts made to SVB UK staff a day after the takeover. Quinn acknowledged that SVB UK staff pay would be impacted by the bank’s failure, but expressed his commitment to ensuring that staff had “good earnings potential going forward”.

HSBC shareholders are currently calling for a spin-off of its more profitable Asian business, with a vote on the matter scheduled for the bank’s annual general meeting in Birmingham on Friday. The bank is urging shareholders to vote against the break-up proposal, stating that they believe their current strategy is the best way to deliver returns for all shareholders. Following the announcement of its strong Q1 results, HSBC shares rose nearly 6% on Tuesday morning.