May 3, 2019

HSBC signals cost discipline to counter revenue risk

"Naturally, if you were to run the same plan today, you'd assume less revenue growth and less cost growth." HSBC signalled the renewed vigilance on costs as it reported net profits of $4.1bn on revenues of $14.4bn, versus the consensus analyst forecast for $3.7bn and $13.9bn - an outperformance over expectations of 11.6 per cent and 3.8 per cent, respectively. Hong Kong-listed shares in HSBC rose 2.6 per cent. The bank's return on tangible equity - a key measure of profitability - was 10.6 per cent in the first quarter, an improvement of 220 basis points compared with a year ago and 10 basis points ahead of analyst expectations. The ROTE figure was still shy of the lender's target of improving returns to more than 11 per cent by next year given that banks tend to be more profitable in the first quarter than later in the year.

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