"Major Banks" Citigroup: HSBC's non-interest income in the first quarter is strong, with stock buybacks reaching up to $3 billion, which is encouraging

Citigroup released a report stating that HSBC Holdings (00005.HK) announced its first-quarter results for this year at noon, with a core pre-tax profit (excluding special items) of USD 9.8 billion, which is 15% higher than market expectations. Revenue for the quarter exceeded expectations by 6%, costs were down 4%, and impairment losses were slightly up by 1%.

The bank indicated that HSBC's first-quarter revenue exceeded expectations, primarily driven by non-interest income (up 15%), while net interest income was in line with expectations. The group's pre-tax profit for the first quarter was USD 9.5 billion, which is 21% higher than market expectations, benefiting from restructuring costs being lower than anticipated. As of the end of March, the group's common equity tier 1 capital ratio was 14.7%, down 20 basis points quarter-on-quarter, which is 10 basis points lower than market consensus, but it still maintained a dividend of 10 cents per share and a stock buyback of up to USD 3 billion (the scale of this buyback is encouraging after a smaller buyback last quarter).

Citigroup noted that HSBC's overall performance is strong, with good cost control, and particularly outstanding performance in wealth management and wholesale banking (especially in foreign exchange business). The guidance for the fiscal year 2025 remains unchanged, including a mid-term return on tangible equity (RoTE) target maintained at around 15% (market consensus is 15.5%), which should enhance market confidence. The bank reiterated its "Buy" rating for HSBC listed in London (HSBA.UK) with a target price of £9.90