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HSBC Off to a Good Start in 2021

Michael Wu, CAIA Senior Equity Analyst

Analyst Note

| Michael Wu, CAIA |

HSBC reported a good first quarter result with adjusted profit before tax at USD 6.4 billion. Comparison against previous quarters is difficult given the large credit cost at the height of the coronavirus pandemic in the first quarter of last year. With economic conditions faring better and the outlook for 2021 improving, the bank had a USD 400 billion net release from Stage 1 and 2 expected credit loss, or ECL. Management also revised ECL guidance lower for 2021. Net interest income was within expectation while non-interest income benefited from favorable market conditions. Trading income was higher while stronger capital markets underpinned net fees and commission income for wealth and personal banking. Management noted the latter was also driven by investments in wealth management in the first quarter. Around 600 wealth managers were hired in the first quarter, 100 of which in mainland China. As such, wealth balance within its wealth and personal banking division increased 2.8% against the end of 2020 and the bank expects asset under management in Asia to grow at mid single digits in the medium term.

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Company Profile

Business Description

Established in 1865 in Hong Kong, London-based HSBC is one of the largest banks in the world with assets of USD 3 trillion and 40 million customers worldwide. It operates across 64 countries globally with around 226,000 full time staff. Key regions include Asia, Europe, the Middle East and North Africa, and North America. United Kingdom and Hong Kong are the two largest markets for the bank. The bank offers retail, commercial and institutional banking, global banking and markets, wealth management, and private banking.

8 Canada Square
London, E14 5HQ, United Kingdom
T +44 2079918888
Sector Financial Services
Industry Banks - Diversified
Most Recent Earnings Mar 31, 2021
Fiscal Year End Dec 31, 2020
Stock Type
Employees 231,751