HSBC and UBS profits suffer after markets roller-coaster

Two of Europe’s largest banks, HSBC and UBS, saw their profits drop sharply after being hit by volatile financial markets in the first three months of the year.

HSBC, which has started the search for a new chairman who will then find a new chief executive, saw headline profits drop 18% to $5.4 billion, slightly better than the City had expected.

“Market uncertainty led to extreme levels of volatility in January and February, which affected our ability to generate revenue in our markets and wealth management businesses,” said chief executive Stuart Gulliver, who has slashed almost 90,000 jobs worldwide as the bank has got out of some 80 businesses since 2011.

“We have a good grip on operating expenses. We are confident of hitting our cost target by the end of 2017.”

HSBC’s revenues fell 5.8% to $15 billion. Bad debts rose from $469 million to $1.2 billion with the largest increase in energy and mining loans. But costs fell by 6.6% in the quarter, and Gulliver said the bank had been “resilient in tough market conditions”.

Analysts worried about HSBC’s ability to keep on increasing its dividend, which was held at 10 cents a share this quarter.

“Such an earnings environment and the fact that they still haven’t touched the regulatory capital requirements makes a progressive dividend untenable,” said Bernstein analyst Chirantan Barua.

At UBS post-tax profits slumped 64% to Swfr707 million on total income down 23% at Swfr6.8 billion.