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HSBC’s mortgage lending slides as profits tumble

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  • 03/05/2016
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HSBC’s mortgage lending slides as profits tumble
HSBC suffered a slip in financial performance in the first quarter amid ‘challenging market conditions’, sending profit before tax to $6.1bn (£4.2bn), compared to $7.1bn (£4.8bn) a year earlier.

The global bank’s quarterly results showed that gross mortgage lending was also affected, reaching $2.69bn (£1.83bn) across all regions, down from $2.74bn (£1.87bn) in the final quarter of 2015. In Europe, where HSBC conducts the majority of its lending, this totalled $1.26bn (£831m), falling from $1.22bn (£854m) in Q4 2015.

Despite the figures, group chief executive Stuart Gulliver (pictured), said the bank had remained “resilient in tough market conditions”.

“Profits were down against a very strong first quarter of 2015, but we increased market share in many of the product areas that are critical to our strategy.

“Market uncertainty led to extreme levels of volatility in January and February, which affected our ability to generate revenue in our Markets and Wealth Management businesses. However, our diversified, universal-banking business model helped to cushion the impact through growth in other parts of the bank. Commercial Banking continued its momentum in spite of the slow-down in global trade, and we increased market share across our strategic trade corridors,” he added.

Gross yields on customer lending remained under pressure, particularly within mortgages and term lending in the UK, HSBC said. However, the impact was largely offset by shifting central bank rates in Asia and Latin America, combined with a portfolio shift from current accounts toward higher-cost savings accounts in Asia.

In February, HSBC confirmed it would remain headquartered in London following 10 months of deliberation in which the bank was considering moving its base to Hong Kong.

Earnings per share also fell in the first quarter to $0.20, down from $0.26 for the equivalent period in 2015. But there was good news for investors with the bank’s dividend remaining instead of being axed as many had feared, held at 10 cents per share.

Graham Spooner, investment research analyst at The Share Centre said this was a sign that HSBC’s results “were not as bad as they could’ve been”.

He said: “This morning, HSBC said its Q1 performance was resilient in tough market conditions, as it reported a solid set of numbers. Cost reductions were behind a 6.6% fall in operating expenses in Q1 compared to the same quarter last year, supporting confidence that it will hit cost target reductions by 2017.”

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