Dan Coatsworth, head of markets at AJ Bell, said: “HSBC’s exposure to faster growing developing economies brings extra growth potential but there are risks too, and the Iran conflict has prompted meaningful impairments alongside first-quarter results.
“These, plus provisions for fraud-related issues in the UK, cast a shadow over the quarterly numbers with earnings coming in below forecasts.
“The sizeable fraud-related charge is a reminder that risks don’t only exist in more far-flung parts of the world.
“It may also raise some questions about the robustness of controls within the business.
“Revenue was better than anticipated and the company is seeing good growth in insurance and wealth management, particularly in Hong Kong.
“These are income streams which are less tied to interest rates and therefore more consistent.
“The shifting outlook on interest rates, with central banks battling to contain inflationary pressures linked to the current energy shock, has prompted an increase in net interest income forecasts.
“Chief executive Georges Elhedery’s messaging aimed to reassure investors that his overhaul of the business, which involves stripping out costs and exiting lower growth markets, remains on track.
“For the most part Elhedery’s tenure and strategy has been warmly received by the market. We now have a reminder of the challenges banks face against an uncertain and frequently shifting backdrop.
“In HSBC’s case, the turnaround of a business which is the stock market equivalent of a container ship won’t always be smooth sailing.”
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