HSBC profit flat as Middle East provisions offset wealth growth

The share price of Hong Kong’s largest lender, HSBC, slumped on Tuesday after the bank reported worse-than-expected, broadly flat first-quarter profit as lower interest rates and provisions linked to the Middle East conflict offset solid growth in its wealth management business.

Net profit for the first three months of 2026 rose 0.14 per cent year on year to US$6.94 billion, or 41 US cents per share, the London-based bank said in a Hong Kong stock exchange filing on Tuesday.

The result missed the US$7.07 billion consensus estimate of 17 analysts polled by the bank. Pre-tax profit fell 1 per cent to US$9.38 billion, also below the consensus forecast of US$9.59 billion.

The higher bad debt charges and worse-than-expected results prompted a sell-off in the lender’s shares. HSBC stock fell 5.2 per cent to HK$136 on Tuesday afternoon after the earnings announcement, hitting a day-low and its lowest level in a month.

The bank recorded US$1.3 billion in credit impairment charges during the quarter, up 49 per cent from a year earlier. HSBC now expects its credit impairment ratio to be around 0.45 per cent in 2026, up from 0.4 per cent set in February, reflecting ongoing uncertainty in the outlook.

This included a precautionary provision of US$300 million to reflect uncertainty related to the Middle East conflict, as well as US$400 million tied to fraud-related, secondary securitisation exposure involving a UK financial sponsor.