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HSBC 27 APRIL 2021 HSBC HOLDINGS PLC 1021 EARNINGS RELEASE Noel Quinn , Group Chief Executive , said : " We had a good start to the year in support of our customers , while achieving materially enhanced returns for our shareholders . I am pleased with our revenue and cost performance , but particularly with our significantly lower expected credit losses . Global Banking and Markets had a good quarter , and we saw solid business growth in strategic areas , including Asia Wealth and trade finance , and mortgages in Hong Kong and the UK . We also strengthened our lending pipelines in our retail and wholesale businesses . The execution of our growth and transformation plans is proceeding well . We made further progress in reducing both costs and risk- weighted assets , and launched new products and capabilities in areas of strength . The economic outlook has improved , although uncertainties remain . We carry good momentum into the second quarter , while maintaining conservative positions on capital , funding , liquidity and credit . " Financial performance ( vs. 1020 ) • Reported profit after tax up 82 % to $ 4.6bn and reported profit before tax up 79 % to $ 5.8bn . Reduced revenue continued to reflect low interest rates . This impact was partly offset as 1Q20 included materially adverse market impacts in life insurance manufacturing and valuations in Global Banking and Markets ( ' GBM ' ) . In addition , there were releases of allowances for expected credit losses in the quarter , reflecting the improved economic outlook . Adjusted profit before tax up 109 % to $ 6.4bn . • All regions profitable in 1Q21 , notably HSBC UK Bank plc reported pre - tax profits of over $ 1.0bn in the quarter . While there continues to be interest rate headwinds , expected credit losses and other credit impairment charges ( ' ECL ' ) fell , reflecting the improved economic outlook . • Reported revenue down 5 % to $ 13.0bn due to the impact of 2020 interest rate reductions in all global businesses . This was partly offset by market impacts in life insurance manufacturing and valuations in GBM . • Net interest margin ( ' NIM ' ) of 1.21 % , down 33 basis points ( ' bps ' ) from 1020. NIM broadly stable with 4020 . ⚫ Reported ECL were a net release of $ 0.4bn , compared with a $ 3.0bn charge in 1020. The net release in 1021 primarily reflected an improvement in the economic outlook from 2020. Stage 3 ECL were lower , in part as 1020 included a large charge related to a corporate exposure in Singapore . • Reported operating expenses up 9 % from higher restructuring and other related costs from our transformation programme and increased investment in technology . Adjusted operating expenses up 3 % due to a higher performance - related pay accrual , partly offset by the impact of our cost - saving initiatives . • Lending increased by $ 2bn on a reported basis and $ 6bn on a constant currency basis in the quarter . Lending growth was in Wealth and Personal Banking ( ' WPB ' ) , notably mortgages in the UK and Hong Kong , and in Commercial Banking ( ' CMB ' ) in areas of strategic focus . • Return on average tangible equity ( ' RoTE ' ) ( annualised ) of 10.2 % , up 6.0 percentage points from 1020 . • Common equity tier 1 ( ' CET1 ' ) capital ratio of 15.9 % , unchanged from 31 December 2020 . Outlook • • The economic outlook has improved , giving us increasing confidence in our revenue growth plans . While early signs are positive , with evidence of growth in strategic areas , including improved lending pipelines , there remain uncertainties . Our 1021 results were favourably impacted by net ECL releases , particularly in the UK , reflecting improved economic forecasts . There remains a high degree of uncertainty as countries emerge from the pandemic at different speeds and as government support measures unwind . Based on the current consensus economic forecasts trajectory , we expect our ECL charge for 2021 to be below the medium - term range of 30bps to 40bps of average loans that we indicated at our 2020 annual results . • We expect mid - single - digit percentage growth in customer lending during 2021. This growth remains highly dependent on the speed at which economies recover from the Covid - 19 pandemic , together with the duration of various government support measures and restrictions . • • We continue to make progress against the strategic plan we announced in February 2021 , which responds to the fundamental changes in our operating environment and aligns to our refreshed purpose , values and ambition . We expect to provide an update at our 2021 interim results in August . As indicated at our 2020 annual results in February 2021 , we do not intend to pay quarterly dividends during 2021. The Group will consider whether to announce an interim dividend at our 2021 half - year results in August . HSBC Holdings plc Earnings Release 1021 1