Europe’s biggest bank, HSBC, has reported stronger than expected profits and says the economic outlook is looking brighter.
The bank reported income of $5.8 billion (£4.2 billion) for the January-to-March period, up from $3.2bn a year earlier. More than half of its profits came from Asia, the region where the bank does much of its business.
The news comes hot on the heels of the announcement of a post-Brexit trade deal between Australia and the UK is nearing completion.
The countries have “reached consensus on the vast majority of elements of a comprehensive free trade agreement” following two days of talks which ended on Friday last week.
Both parties will now enter a “sprint” to iron out the remaining issues with a view to reaching a deal by June.
In a strong recovery, HSBC reported solid growth in its mortgage business in the UK and Hong Kong also helped to boost profits. The bank says it is on track with its restructuring plan, including cutting 35,000 jobs and focusing on earning more client fees in Asia.
The jump in profits marks a turnaround for HSBC, which reported a 34 per cent drop in profits for 2020, partly due to the impact from the coronavirus pandemic.
Noel Quinn, HSBC’s group chief executive, said the bank had made a “good start to the year”.
He said: “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 and the UK.
“We also strengthened our lending pipelines in our retail and wholesale businesses.”
The bank expects lending to continue to grow in 2021, although that growth depends on the global recovery from the pandemic.
Following the UK-Australia trade talks, in a joint statement published on gov.uk following last week’s negotiations, International Trade Secretary Liz Truss said the deal was a win-win for both nations.
“It is a fundamentally liberalising agreement that will support jobs across the country and help us emerge stronger from the pandemic,” she said.
The Australia deal will be one of the first post-Brexit agreements that does not simply roll over trade terms that Britain previously had as a member of the EU.
Although the deal will have a relatively modest effect on UK GDP, increasing it by as little as 0.02 per cent, it has wider strategic significance as a springboard for the UK to join the 11-nation Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP).
The CPTPP – which also includes Mexico, Japan, Canada, Singapore and Vietnam – accounts for 13 per cent of global GDP.
Ms Truss hopes the Australia deal will help the UK to join the CPTPP within the next 12 months.
Australia will hope to gain increased access to the UK’s agriculture sector as part of the agreement, sources close to the negotiations have said.
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