Shares in HSBC saw an uptick in early trading following the bank's decision to increase provisions for loan losses in its first-quarter report.
The FTSE 100 heavyweight's stock climbed two per cent amidst trade war concerns overshadowing the lender's results, as reported by .
HSBC raised expected credit losses to $876m (£653m), up from $202m, signalling a stark outlook on the global economy.
This comes after a challenging period for the lender's shares, triggered by President Donald Trump's unpredictable tariff policies sparking a global trade war. The bank's shares took a 15 per cent hit in the week following Trump's broad tariffs on trading partners.
Despite the challenging market backdrop, the London-based firm announced a share buyback of $3bn in its first quarter report.
HSBC was particularly impacted by the hefty tariffs imposed on Asia and the escalating trade war between the US and China, given the bank's historical ties to the region.
The bank confirmed it would complete the buyback before its 2025 interim results.
The first quarter reporting period narrowly missed Trump's 'Liberation Day' on April 2, which marked the start of the market turmoil.
HSBC's profit and revenue beat expectations
The FTSE 100 giant reported $9.48bn in pre-tax profit, surpassing analysts' predictions of $7.83bn.
Revenue for the first three months of the year reached $17.65bn, beating analyst estimates of $16.67bn.
HSBC experienced a significant 25 per cent surge in fee income within its corporate and institutional arm, reaching $3.7bn, benefiting from the market volatility spurred by tariffs.
The bank's revenue from debt and equity markets soared by 47 per cent to $1bn, while wholesale transaction banking climbed 14 per cent to $2.5bn.
Despite these gains, the group's overall revenue declined by 15 per cent year-on-year, with profits falling 25 per cent compared to the previous year.
This downturn was attributed to one-off positive disposals in the first quarter of 2024, including the lucrative $4.8bn sale of HSBC's Canadian banking operations.
Senior equity analyst at Hargreaves Lansdown, Matt Britzman, commented on the results: "For investors, this is exactly what they want to see: a core business holding up well just as the global outlook turns murky."
Britzman also noted that "A big part of out performance came from strong fee income in areas like currency trading and wealth management – two bright spots that helped support a solid showing from its more traditional banking operations."
The bank's net interest margin, an indicator of profitability from lending, edged down by four basis points to 1.59 per cent.
HSBC's net interest income decreased by $400m to $8.3bn, influenced by the Bank of England's reduction of interest rates to 4.5 per cent from the post-financial crisis peak of 5.25 per cent last July.
The bank has issued a cautionary note regarding the shifting economic landscape, which is being reshaped by geopolitical tensions.
HSBC has acknowledged the increasing uncertainty in the macroeconomic landscape, particularly due to protectionist trade policies, causing fluctuations in economic forecasts and financial markets and negatively affecting consumer and business sentiment.
The banking giant expressed confidence in its "conservative approach to credit risk and strong deposit franchise" as key factors in preparing for potential challenges ahead.
HSBC's chief executive Georges Elhedery commented on the bank's performance: "Our strong results this quarter demonstrate momentum in our earnings, discipline in the execution of our strategy and confidence in our ability to deliver our targets."
Elhedery further emphasised the bank's commitment to its customers amidst these uncertain times, stating: "We continue to support our customers through this period of economic uncertainty and market unpredictability, which we enter from a position of financial strength."
