HSBC Holdings plc (ADR)(NYSE:HBC) Tops Estimate On Increased Investment Banking Revenue

HSBC Holdings plc (ADR)(NYSE:HBC) shares are bucking the market trend as the bank posted a 26% jump in its first-quarter profit driven by strong performance at Bank’s investment banking division and emerging-market operations in addition to a decline in U.S. loan losses.The bank posted a profit of $6.8 billion, compared to a year ago profit of $5.4 billion, well above analysts’ estimates of e $5.9 billion. Investment-banking revenue climbed 12% after bond markets recovered in Europe.Pretax profit at the investment bank, which is overseen by Samir Assaf, rose 5 percent to $3.08 billion. The bank profited from an improvement in trading after the European Central Bank provided unlimited three-year loans to the region’s banks through its Longer Term Refinancing Operation. That offset a decline in revenue from equity trading, HSBC said.

Loan impairment charges and other credit risk provisions as well as operating expenses were broadly in line last year. Underlying cost efficiency improved to 55.5 percent from 58.7 percent last year, driven by increased revenues.
Net interest income increased to $10.09 billion from $9.91 billion in the earlier year quarter. Total operating income remained flat at $20.44 billion for the latest period.Revenue that comprises of net operating income before loan impairment charges and other credit provisions was $16.2 billion, around $800 million lower than the prior year, reflecting higher adverse credit spread movements. Underlying revenue increased led by growth in all segments.
HSBC acquired Household for $15.5 billion and gained almost 50 million U.S. clients. It stopped taking new business in 2009 and had about 8.8 million active customer accounts at the end of 2011, according to a company filing. HSBC North America returned to profit in 2010 after three years of losses, asset sales and more than 6,000 job cuts.