Jefferies reiterates 'hold' rating on HSBC following Q1 results

Jefferies reiterated its ‘hold’ rating on HSBC on Tuesday, following the publication of the lender's forecast-beating first quarter numbers.

The bank, which upped its target price for the blue chip last week to 414.0p from 400p, said the results were “strong”.

It noted: “HSBC has produced adjusted first quarter pre-tax profit of $6.4bn, 39% ahead of Jefferies estimates and 49% of consensus on revenue and credit. The largest variance was on credit costs, where a net $400m release reported – management now guide that 2021 credit costs are expected to remain below medium-term budget of 30-40bps. Of the $400m net credit release, $288m was attributed to the UK.

“Adjusted revenue of $13.3bn was 5% ahead of our, and consensus, estimate on non-interest income.”

Jefferies continued: “Adjusted costs were 6% short of our expectations, by underlying cost growth of 3%.

“For 2021, management expect costs broadly stable versus 2020, but may adjust performance related pay accrual to reflect the performance of the group. We note that return on tangible equity in the first quarter was 10.2%.”

Earlier on Tuesday, HSBC chief executive Noel Quinn said global banking and markets had witnessed “a good quarter”, with “solid business growth” in core areas such as Asia wealth and trade finance.

As at 1345 GMT shares in HSBC were ahead 3% in London at 436.3p.