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Volatile market conditions impact HSBC's Q1 profit

HSBC HoldingsPlc reported a year-over-year decline in first quarter profit,caused by challenging market conditions.

First-quarter profit attributable to shareholders of theparent company was $4.30 billion, down from $5.26 billion in the year-agoperiod. EPS for the period was 20 cents, compared to 26 cents a year earlier.

Group CEO Stuart Gulliver said tough market conditionsresulted in extreme levels of volatility in January and February, impactingrevenue generation at its markets and wealth management businesses.Adjusted wealth products revenue, for example, dropped to $1.20 billion in thefirst quarter from $1.56 billion in the year-ago period.

That challenge was in part offset by performances elsewhere,such as in personal lending in Asia and Mexico, the bank said.

HSBC's retail banking and wealth management businessreported first-quarter pretax profit of $1.36 billion, down from $1.84 billiona year ago. Pretax profit from commercial banking declined year over year to$2.08 billion from $2.23 billion, while pretax profit from global banking andmarkets also dropped, to $2.00 billion from $2.79 billion.

Net interest income declined on a yearly basis to $7.91billion from $8.27 billion, while net fee income also slipped to $3.20 billionfrom $3.68 billion. Net trading income for the quarter rose to$2.84 billion from the year-ago $2.58 billion. Gains less losses from financialinvestments amounted to $192 million, down from $647 million in the firstquarter of 2015.

Return on average ordinary shareholders' equity stood at anannualized 9.0% in the first quarter, compared to 11.5% a year earlier.

The U.K. bank's common equity Tier 1 ratio stood at 11.9% atthe end of March, unchanged from 2015-end. Its Tier 1 transitional ratio stoodat 13.7% at March-end, compared to 13.9% at Dec. 31, 2015.

Its leverage ratio was 5.0% at the end of March, alsounchanged from 2015-end.

HSBC's board of directors declared a first interim dividendof 10 cents per ordinary share for the 2016 financial year. The ordinary shareswill be quoted ex-dividend in London, Hong Kong, Paris and Bermuda on May 19,while its American Depositary Shares will be quoted ex-dividend in New York onMay 18. The dividend will be payable July 6 to holders of record on May 20.