HSBC, which operates branches in Birmingham, has reported first-quarter profits that fell short of expectations after taking a $1.3 billion (£960 million) hit. The bank's profits were impacted by a $400 million fraud-related charge and the ongoing conflict with Iran.
Profit Decline and Charges
The UK-based lender posted pre-tax profits of $9.4 billion (£6.96 billion), slightly down from $9.5 billion (£7 billion) in the same period last year and lower than analyst forecasts. The decline was driven by an unexpected $400 million (£295 million) loss linked to a fraud case in the UK, involving loans made to a private equity firm that had exposure to a private-credit firm within HSBC's corporate and institutional banking (CIB) division. HSBC did not disclose the names of the companies involved.
Additionally, the bank set aside $300 million (£222 million) due to what it described as "heightened uncertainty" and a worsening economic outlook related to the Iran war. The overall expected credit loss charge of $1.3 billion (£960 million) was 50% higher than a year ago, also reflecting the impact of higher trade tariffs.
CEO Comments
Chief Executive Georges Elhedery stated: "We continued to make positive progress in creating a simple, more agile, growing HSBC. Each of our four businesses contributed to firm-wide revenue growth." He added: "In periods of greater uncertainty, customers turn to us more as their trusted partner to navigate complexity with the financial strength, stability and expertise they know they can rely on. We remain confident in achieving the targets we set out in February 2026."
Analyst Reaction
Chris Beauchamp, chief market analyst at IG, commented: "HSBC’s results always bring more of an international flavour than its UK peers. Unfortunately that means the Hormuz crisis looms large in the results, casting a shadow over an otherwise solid set of numbers. The theme is grimly familiar to investors; were it not for the crisis, earnings outlooks would be much rosier. The warnings around the economic impact will only continue to grow the longer the situation remains unresolved."
