The UK bank had a good start of the year while achieving materially enhanced returns for its shareholders.

HSBC has posted profit after tax of US$4.6 billion in the first quarter of 2020 – an increase of 82% from the prior year quarter. Reported revenue of US$13 billion was five percent lower than in 1Q 2020 with the reduction primarily reflecting a fall in net interest income as a result of the impact of lower global interest rates.

In the global private banking (GPB) unit, revenue decreased by eight percent to US$42m. This was partly offset by growth in non-interest income of US$23m, as investment revenue increased reflecting market volatility and higher fees from advisory and discretionary mandates.

In investment distribution, revenue, at US$100m, was 14% higher, reflecting strong equity market conditions in Hong Kong SAR, which resulted in growth in brokerage fees as transaction volumes increased by 75% and higher mutual fund sales.

Hong Kong SAR was also the jurisdiction where the bank issued the highest number of structured products in the primary market between 1 January and 31 March 2021, according to SRP data.

Some 2,037 reverse convertibles were launched by HSBC in Hong Kong SAR during the quarter – an increase of 37% from Q1 2020 – with the vast majority either linked to a single share (803) or a basket of shares (1,124). The share of Alibaba was the most popular and was used as underlying for 443 daily cash dividend equity linked investments. The shares of HSBC itself, JD.com and Tencent Holdings, were also in demand, seen in 341, 287, and 213 products, respectively.

Other Asian markets where the bank was active in the structured products space were Taiwan, China and Japan. In the former, it issued 40 memory coupon autocalls targeted at private banking investors while in China it was the manufacturer behind 39 deposits, including the two-year CNY Note S13 that was linked to the proprietary HSBC Low Beta Factor ESG Europe Price Return Index.

HSBC also exclusively licensed the Solactive China Future Consumers ESG Screened PR Index which was used as the underlying for a 100% capital-protected deposit in the quarter.

In Japan, meanwhile, it sold 12 products worth US$79m via local securities houses, of which SBI securities distributed eight.

Outside of Asia, the only other market of note was the US, where it continues to ‘explore’ both organic and inorganic options for its retail banking franchise. HSBC sold 199 products for a combined US$774m in Q1 2021, down compared to the 317 products worth US$1.1 billion in Q1 2020.

The bank’s best-selling structure in the US was a 1.15-year accelerated return note on the iShares Global Clean Energy ETF that sold US$39.9m in January. It was distributed via Bank of America and offers 300% participation in the upside performance of the fund, capped at an overall return of 144.01%.

On the secondary market, HSBC issued more than 29,000 open-ended turbo certificates via its HSBC Trinkaus & Burkhardt vehicle that were listed on the exchanges of Frankfurt and Stuttgart while 445 warrants and callable bull bear certificates were listed in Hong Kong SAR.

The bank’s global banking and markets (GBM) business posted a US$1.9 billion profit before tax, a 121% increase from the prior year quarter.

In France, as part of its strategic review of its retail banking operations, the bank is continuing with negotiations in relation to a potential sale, although no decision has yet been taken. If any sale is implemented, a loss on sale is expected, according to the bank.

As of 31 March 2021, the banks consolidated balance sheet included US$96 billion worth of debt securities in issue (December 2020: US$95.5 billion).

‘Global banking and markets had a good quarter, and we saw solid business growth in strategic areas, including Asia Wealth and trade finance, and mortgages in Hong Kong SAR and the UK,’ stated Noel Quinn (pictured), group chief executive, commenting on the results.

Click the link to read the first quarter 2021 earnings release and the presentation.