Pre-tax profits at HSBC were down by $1.6 billion to $4.2 billion in the first quarter of the year.

The bank said that the profit decline reflected a net charge for expected credit losses and other credit impairment charges (ECL) compared to a net release during the same period of last year, as well as lower revenue.

It explained that higher ECL charges for the quarter had been driven by exacerbated inflationary pressures and increased uncertainty on the forward economic outlook due to the Russia-Ukraine conflict.

Reported revenue was down by 4 per cent to $12.5 billion, which HSBC said was mainly in wealth and personal banking due to “unfavourable market impacts in life insurance manufacturing and lower investment distribution revenue in Hong Kong”. This was also driven by lower global debt markets and principal investments revenue in global banking and markets.

“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,” said Noel Quinn, group chief executive, HSBC. “We have further reduced costs while maintaining high levels of technology investment, and remain on track to achieve our cost and RWA reduction targets for 2022.

“Although the economic outlook remains uncertain, the continued upward path of interest rates since our full year results has further strengthened our confidence in delivering a double-digit return on average tangible equity in 2023.”

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