HSBC’s takeover of Silicon Valley Bank for £1 in March amid concerns of a fresh global banking crisis gave the bank a $1.5bn (£1.2bn) boost to its balance sheet in the first three months of the year.
HSBC’s pre-tax profits soared by more than $4bn (£3.2bn) in the first quarter and revenue shot up by 64pc to $20.2bn (£16.2bn) compared to the same period 12 months ago, with the company crediting the rise to higher net interest income due to rate rises across the globe.
The increase has seen the banking group announce its first dividend of 10 cents per share since before the pandemic in 2019, as well as a share buy-back of up to $2bn (£1.6bn).
This was as its pre-tax profits rose from $8.7bn (£7bn) to $12.9bn (£10.3bn) from a year ago as operating expenses fell by 7pc to $7.6bn dollars, primarily due to lower restructuring and related costs following the group’s cost-saving programme at the end of 2022.
Its results also included a provisional gain of £1.2bn on the Silicon Valley Bank deal, which was brokered by the Bank of England and the Government within days of the collapse of the bank in the US.
The figures come a day after it emerged First Republic Bank will be sold to JP Morgan after becoming the third major US lender to fall in two months.
The Californian lender was seized by regulators on Monday morning amid concerns about its financial health following a plunge in deposits and its share price.
HSBC group chief executive Noel Quinn said: “We remain focused on continuing to improve our performance and maintaining tight cost discipline, but we also saw an opportunity to invest in SVB UK to accelerate our growth plans.”
HSBC said in its first quarter results that it expects net interest income of at least $34bn (£27.2bn) in 2023 after its profits were boosted by the surge in global interest rates.
Its statement said: “While the interest rate outlook remains positive, we expect continued pressure from increased migration to term deposits as interest rates rise.”
Mr Quinn added:
Our strong first quarter performance provides further evidence that our strategy is working.
Our profits were spread across out major geographies and all three global business performed well as we continued to meet our customers’ needs through our internationally connected franchises.
With the good momentum we have in our business, we expect to have substantial future distribution capacity for dividends and share buy-backs.
