Private Banking Profits Bounce Back At HSBC

Tom Burroughes

7 May 2014

HSBC, the banking group, reported that global private banking logged a pre-tax profit of $201 million in the first three months of 2014, bouncing back from a loss in the same period last year of $125 million.

The UK/Hong Kong-listed banking group, which does business in North America, said its pre-tax profit in the region amounted to $449 million across all business lines, up from $140 million a year ago. In Asia, its biggest region by size of business, pre-tax profit was $3.764 billion, down from $5.514 billion a year before.

“In GPB , revenue was $0.1 billion lower, reflecting a managed reduction in client assets as we continued to reposition the business, which led to a reduction in fee and trading income. We attracted positive net new money in areas that we have targeted for growth, including our home and priority markets and the high net worth client segment,” HSBC said in a statement today.

Across all divisions and regions of the bank, pre-tax profit in Q1 2014 was $6.785 billion, HSBC said, down by 20 per cent from $8.434 billion a year earlier. There were declines in some business lines such as global banking and markets over the 12-month period.

Across all divisions, first-quarter underlying revenue was $15.709 billion, down by 8 per cent from $17.135 billion in the same period in 2013 mainly reflecting the reduced impact from significant items of $1.076 billion.

Excluding these items, revenue dropped by $350 million or 2 per cent, driven by retail banking and wealth management and global banking and markets, partly offset by growth in commercial banking.

"Global banking and markets had a relatively good performance and we grew our market share in several product categories. Commercial banking saw revenue growth but, in our principal retail banking and wealth management business, revenues were impacted by changes in incentive plans and product pricing," Stuart Gulliver, group chief executive, said in a statement.

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Client assets at the private bank stood at $381 billion at the end of March this year, a decline from $403 billion a year earlier and down from $382 billion at the end of December last year. Broken down by geography, North America assets were flat from the end of December 2013; Asia assets were up from $108 billion at end-December; European assets were down from the $197 billion for the end of 2013, the statement said.

The bank noted that there was a loss of $279 million recognized following the write-off of allocated goodwill relating to its global private banking business in Monaco.