-- HSBC (HSBA.L) upheld its midterm outlook on Tuesday as higher fee and interest income compensated for greater expected credit losses and operating expenses.
For the three months ended March 31, profit after tax attributable to ordinary shareholders of the parent edged up year over year to $6.94 billion from $6.93 billion as revenue growth from wealth fees and net interest income partly offset higher impairment charges, operating expenses, and other one-off losses. Pretax profit slipped to $9.38 billion from $9.48 billion.
Net interest income jumped annually to $8.95 billion from $8.3 billion, led by deposit balance growth and lower market interest rates. Net fee income also rose to $3.72 billion from $3.32 billion.
The British lender's net operating income was $17.32 billion, up from $16.77 billion a year ago, thanks to firm-wide revenue growth across each of its four main businesses. The annualized return on average tangible equity decreased to 17.3% from 17.9%.
Against this backdrop, the board declared an unchanged first interim dividend for 2026 of $0.1 per share and affirmed group financial targets for an RoTE of at least 17%, excluding notable items, for 2026 to 2028.
For 2026, HSBC updated its expectations for banking net interest income to $46 billion from at least $45 billion on the back of an improved interest rate outlook. The company also flagged an expected credit losses charge of 45 basis points as a percentage of average gross loans, higher than the guidance in February of 40 basis points.
"The Group is well positioned to manage the changes and uncertainties prevalent within the global environment in which we operate, including in relation to the conflict in the Middle East," HSBC said. The company warned that it could expect a mid-to-high single-digit percentage adverse impact on its pretax profit in a severe stress scenario that includes higher oil prices, rising inflation, a material slowdown in GDP and rising unemployment, among others.