HSBC shares drop as first-quarter pre-tax profit misses estimates

Europe’s largest lender HSBC on Tuesday reported first-quarter pre-tax profit of $9.4 billion, missing analysts’ estimates on the back of higher expected credit losses and other impairment charges.

HSBC’s revenue gained 6%, year on year, exceeding estimates, on stronger wealth fee and other income.

Here are HSBC’s first-quarter results compared with the consensus estimates compiled by the bank.

Pre-tax profit: $9.37 billion vs. $9.59 billionRevenue: $18.62 billion vs. $18.49 billion

The lender, whose first-quarter profit before tax fell 1% year on year, saw shares in Hong Kong drop 3.7%.

Expected credit losses of $1.3 billion were $400 million higher compared with the same period a year earlier, according to HSBC, linked to exposure to a financial sponsor in the UK and provisions owed to increased uncertainty and a worsening economic outlook due to the conflict in the Middle East.

The bank, however, said that it was on track to delivering $1.5 billion in annualised cost reduction by the end of June 2026. “Through the privatisation of Hang Seng Bank, we expect to realise $0.5bn in pre-tax revenue and cost synergies across both our brands in Hong Kong by the end of 2028.”

HSBC completed the privatization of Hang Seng Bank on Jan. 26, with the latter’s shares subsequently delisted from the Hong Kong Stock Exchange.

The bank’s net interest income rose 8% in the first quarter, year on year, to $8.9 billion as did operating expenses, also up 8%, owed to the impacts of inflation, forex, higher planned spending and performance-related pay.

The lender highlighted risks due to the Middle East conflict, including higher oil prices, sharper inflation, a significant slowdown in GDP, warning that if those factors came into play there could be a “mid-to-high single digit percentage” negative impact on its profit before tax.

While HSBC maintained its targeted return on tangible equity — a measure of profitability — of 17%, it warned that should the adverse impact from the Middle East crisis materialize, it could bring RoTE, excluding notable items, below 17% in 2026. Annualised RoTE in the reported quarter was 17.3%.

The HSBC board also approved its first interim dividend for 2026 of 10 cents per share.