HSBC's pre-tax Q1 profits fall by 4 percent

HSBC Q1 profit misses estimate, unveils $2-bn share buyback

London-based HSBC said pretax profit slipped 4 percent from a year ago to $4.8 billion as operating expenses for business investment and enhancing "digital capabilities" rose 13 percent, outpacing revenue, which grew 6 percent to $13.7 billion.

Europe's largest banks by assets posted profits before tax of $4.8 billion in the first three months of 2018, down by 4 percent, compared with the same period past year, according to the bank's statement released on Friday.

The bank's profit shrank mainly as a almost 13 percent rise in operating expenses outpaced revenue growth of 5.5 percent.

The surprise dip sent its Hong Kong shares down around 2.5pc on Friday morning United Kingdom time.

"This has enabled us to announce a further share buyback", he said.

The bank made over 75 percent of its profits in Asia in 2017.

HSBC said the reason for the fall was due to a 13% increase in operating expenses compared to a year ago, related to the retail banking business in the United Kingdom and China.

The group meanwhile announced that it meant to initiate e a share buyback of up to $2 billion, while cautioning that it expects this to be the only share buyback for the current year, "in light of the growth opportunities that we now see".

He added that he was positive about the outlook for 2018.

HSBC's common equity tier 1 ratio - a measure of financial strength - was 14.5 per cent at the end of March, flat compared with end-December and higher than 14.3 per cent in the first quarter of previous year.

HSBC's common equity tier 1 ratio - a measure of financial strength - was 14.5 percent at the end of March, flat compared to end-December and higher than 14.3 percent in the first quarter of 2017.

Nevertheless, the first-quarter numbers still "represent a good start for 2018 for HSBC", Iain Mackay, HSBC's group finance director, told CNBC's Sri Jegarajah after the release of the results.

HSBC's revenue rose, however, to USD13.71 billion from USD12.99 billion the prior year and from USD12.30 billion in the last quarter of 2017.

Analysts had previously expected the bank to report a pre-tax profit of $5.7bn.

Pre-tax profits from its Hong Kong operations hit a new record of $3.15bn, providing more than half the total for the group. "The Hong Kong dollar is now at the weak end of the peg [to the United States dollar] so it's possible that we'll have a more sustained rise in Hibor rates soon", Mr Flint said.

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