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* Q1 profit before tax $5 bln versus $6.1 bln a year ago
* CET1 ratio at 14.3 pct vs 13.7 pct consensus
* CFO rules out fresh buybacks, dividend raise in short term
By Sumeet Chatterjee and Lawrence White
HONG KONG/LONDON, May 4 HSBC Holdings Plc
reported a better than expected first-quarter profit
and capital position on Thursday, boosting the lender's share
price in Hong Kong as the bank seeks to move from restructuring
The bank's common equity tier 1 ratio - a key measure of its
financial strength - was 14.3 percent at the end of the March
quarter, up from 11.9 percent in the same period last year and
better than the 13.7 percent expected by analysts.
HSBC's shares rose 2 percent in Hong Kong following the
announcement, outperforming a 0.5 percent drop in the benchmark
Hang Seng index.
HSBC chief financial officer Iain Mackay ruled out a fresh
share buyback in the short term as a means of using some of that
excess capital, after the bank said it completed its previously
announced $1 billion share buy-back in April.
"We've just finished one, we need to catch our breath a
little bit," Mackay told Reuters on Thursday.
Mackay also reiterated the bank's stance that it will hold
its dividend steady for now, quashing shareholders' hopes that
the lender's robust capital levels would see it boost payouts.
HSBC is expected to receive a further capital boost as it
repatriates some $8 billion currently stuck in its U.S.
subsidiary, following approval by the Federal Reserve last year
of its plans to begin the process.
"With a strong capital position, we won't be surprised if
the bank announces another share buy-back in the second half,"
Bernstein analyst Chirantan Barua said in a research note
following the results announcement.
HSBC said pretax profit for the first three months of the
year fell to $5 billion, down from $6.1 billion a year ago but
better than the $4.3 billion expected on average by analysts
according to the bank's own survey.
The profit decline was due to a change in the accounting
treatment of the fair value on its debt and because its year-ago
earnings included the operating results of the Brazil business
that it sold in July, HSBC said.
Revenue in the quarter dropped 13 percent to $13 billion.
However, the bank's adjusted profit before tax, excluding
the exceptional items, rose 12 percent in the quarter to $5.9
Shareholders at the bank's annual general meeting last week
overwhelmingly voted in favour of re-electing Chief Executive
Stuart Gulliver to the lender's board, in an affirmation of his
strategy in recent years to shrink and refocus the bank.
Gulliver and outgoing Chairman Douglas Flint have sought to
unwind much of the empire-building of their predecessors since
their appointments in 2010 - a response to a tough environment
of low interest rates and increased regulation.
In the first quarter HSBC said it had increased customer
lending by 17 percent over the same period last year and assets
under management by 15 percent in China's Pearl River Delta, a
key plank of the management duo's strategy to refocus on Asia.
China's slower than expected growth has caused the lender to
expand more cautiously than planned in the booming southern
region of China.
(Reporting by Sumeet Chatterjee and Lawrence White; Editing by
Edwina Gibbs, Greg Mahlich)