Private Banking Revenue Dips At HSBC

Tom Burroughes

27 April 2022

The wealth and personal banking arm of UK/Hong Kong-listed yesterday reported that global private banking revenue fell 3 per cent in the first quarter of 2022 from a year earlier.

The drop was caused by a decline in brokerage and trading revenue, reflecting reduced client activity compared with a strong first quarter of 2021, the banking group said. That cut 1Q21. This reduction was partly offset by higher net interest income due to the impact of rising interest rates and from higher annuity fee income, HSBC said in a statement.

Across the wealth and personal banking business – that includes its private bank – adjusted profit before tax was $1.1 billion, falling 40 per cent on a year ago. The fall was caused by lower wealth revenue, primarily due to an adverse movement of $300 million in market impacts in life insurance manufacturing, while sales of insurance products were “strong”, it said. This was partly offset by higher revenue within personal banking from rising interest rates and strong balance sheet growth. There was also a net expected credit losses (ECL) charge in 1Q22 of $300 million, versus minimal releases in a year ago. Operating costs rose by $100 million, HSBC said.

“Our strategy is on track, with organic growth and good momentum across most parts of the group. While profits were down on last year’s first quarter due to market impacts on Wealth revenue and a more normalised level of ECL, higher lending across all businesses and regions, and good business growth in personal banking, insurance and trade finance bode well for future quarters,” Noel Quinn, group chief executive, said. “We have further reduced costs while maintaining high levels of technology investment and remain on track to achieve our cost and RWA reduction targets for 2022.”

Commenting on HSBC’s exposures to Russia, Quinn said: “We are supporting our colleagues in the region while implementing the sanctions put in place by the UK and other governments. HSBC Russia is not accepting new business or customers and is consequently on a declining trend. The vast majority of our business in Russia serves multinational corporate clients headquartered in other countries and, as a global bank, HSBC has a responsibility to help them manage these challenging circumstances."

Group results
HSBC reported an after-tax profit of $3.4 billion, falling by $1.1 billion on the previous quarter; pre-tax profit fell to $4.2 billion, down by $1.6 billion. The decrease was caused by a net charge for expected credit losses and other credit impairment charges in the first quarter of this year, versus a net release a year earlier, and also because of lower revenues.

All regions continued to be profitable. In 1Q22, the bank’s Asia operations contributed $2.8 billion to the group reported profit before tax.

Shares in HSBC were down about 2.9 per cent in London trade yesterday afternoon, at around 487.1 pence per share.