HSBC reports low but "significantly higher" profits

Today European largest bank HSBC Holdings reported that its first quarter profits were "well ahead" of last year boosted by record results in its investment bank arm and gains on the value of its own debt, according to Reuters. The bank said that excluding the fair value gains on its own debt, first quarter profit was below a year ago, but "significantly higher" than in the fourth quarter.

The report also revealed that loan impairment charges and other credit risk provisions were higher than a year ago but lower than the previous quarter on both an underlying and reported basis. The bank said that charges in the U.S. were "slightly lower than expected”. As it is known HSBC is shutting most of its U.S. consumer lending business after losing billions in the last three years on subprime housing loans.

Loan impairment charges on its HSBC Finance exit portfolio were $2.4 billion, about $300 million more than a year ago, but down $600 million from the fourth quarter.

Last month the bank raised 12.5 billion pounds in a record rights issue aimed at restoring its traditionally strong balance sheet advantage over rivals. That left it "well positioned to ride out the economic uncertainty ahead, and to take advantage of opportunities to grow," the bank said. The fundraising lifted HSBC's core equity tier 1 capital ratio to 8.6 percent at the end of March.

The investment bank unit Global Banking and Markets also reported record first quarter results at the expense of strong trading in foreign exchange and interest rates. It said the strong performance continued in April.