Its ECL charge was increased to £471m, compared with a release of £314m in Q1 last year. The bank attributed this to the direct and broader economic impacts of the Ukraine-Russia conflict and inflationary pressures.
However, it said this was partially offset by the release of all its remaining Covid-19 reserves.
HSBC Russia is also not accepting new business or customers and group chief executive Noel Quinn said that part of the market was “consequently on a declining trend”.
Revenue generated by its wealth and personal banking (WPB) sector, which includes mortgage lending, also fell by four per cent to £9.8bn. It said this reflected “unfavourable market impacts in life insurance manufacturing” as well as lower revenue across both the investment distribution in Hong Kong, global debt and principal investments markets.
However, WPB customer lending rose by £3.9bn to £383bn primarily driven by higher mortgage balances. Performance in the UK was of note, as lending rose by £2.3bn. Mortgage balance growth in the UK exceeded the Australia and Hong Kong markets where balances increased by £786m apiece.
Mortgage lending rose by £18bn or seven per cent during the period, with growth recorded across all regions, notably in the UK and Asia.
HSBC’s net interest income was £157m higher in Q1 compared to last year, which it attributed to the interest rate rises and strong balance sheet growth.
The bank said its outlook remained positive with expected growth in net interest income and a recovery in its Hong Kong wealth business once Covid-19 restrictions are lifted.
Quinn added: “I’m encouraged by our start to the year. Our strategy is on track, with organic growth and good momentum across most parts of the group.
“While profits were down on last year’s first quarter due to market impacts on wealth revenue and a more normalised level of ECL, higher lending across all businesses and regions, and good business growth in personal banking, insurance and trade finance bode well for future quarters.”
He said although the economic outlook remained uncertain, the continued upward path of interest rates since its full-year results strengthened the group’s confidence in delivering a “double-digit return” in 2023.
Quinn continued: “The Russia-Ukraine war continues to have devastating consequences both within Ukraine and beyond. Our thoughts are with the many thousands who have lost their lives, their families and the many more whose lives will never be the same.
“We are supporting our colleagues in the region while implementing the sanctions put in place by the UK and other governments.”
