By Margot Patrick and Saurabh Chaturvedi 

HSBC Holdings PLC said it's keeping a watchful eye on the U.K. economy as it posted better than expected first-quarter results.

The Asia-focused lender posted $4.13 billion net profit, up 33.7% from $3.09 billion a year earlier. The bank had been expected to make a net profit of $3.7 billion, according to consensus estimates released by the company last month.

Lending and deposits grew in its core Hong Kong and U.K. markets, helping offset a revenue decline in investment banking. Adjusted revenue for the quarter rose 9% to $14.43 billion from $13.2 billion, while operating expenses were up 3% to $8.06 billion from $7.8 billion. The adjusted figures strip out currency moves.

Chief Financial Officer Ewen Stevenson said the bank is "growing in the areas where we want to be growing," such as Asian retail banking and global transaction banking, and that its cost growth is manageable. He said U.K. mortgage lending and deposits grew in the quarter too, but that it's watching closely for any deterioration in the British economy and customers' ability to repay debt.

"If there's one market in the world we're watching closely for credit it would be the U.K. We have been growing the top line nicely but obviously (Brexit) uncertainty creates issues for business and consumer confidence and that's what we're seeing," Mr. Stevenson said.

HSBC shares were up 2.6% in later afternoon trading in Hong Kong.

Mr. Stevenson said the bank has seen limited impact from the continuing trade dispute between the U.S. and China and hasn't felt the effects of a slowdown in global trade.

Within its global banking and markets business, global trade receivables and finance revenue grew 12% in the quarter to $211 million from $189 million. That helped counter a 9% fall in global banking revenue and a 5% fall in global markets revenue from lower client activity.

Mr. Stevenson said an effort to improve returns on equity in its U.S. business is still a work in progress and remains the bank's most challenging strategic priority. HSBC has around 1.3 million retail-banking and wealth-management customers in the U.S., clustered mainly on the east and west coasts, as well as commercial- and investment-banking operations in the country.

Write to Margot Patrick at margot.patrick@wsj.com and Saurabh Chaturvedi at Saurabh.Chaturvedi@wsj.com

 

(END) Dow Jones Newswires

May 03, 2019 03:33 ET (07:33 GMT)

Copyright (c) 2019 Dow Jones & Company, Inc.
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