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HSBC posts strong jump in pre-tax profit, reins in costs

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Hong Kong (AFP)

Banking giant HSBC said on Friday that pre-tax profit jumped 30.7 percent to $6.2 billion in the first three months of the year, describing the results as "encouraging" despite an uncertain global outlook.

The London-based behemoth also said it had reduced reported operating expenses by 12 percent as group chief executive John Flint embarks on a planned overhaul aimed at growing the bank while keeping a lid on costs.

Reported profit after tax jumped 31.4 percent to $4.9 billion in the period, thanks to strong revenue growth in retail banking, wealth management and commercial business, the lender said.

"We have made a good start to 2019," Flint, who took the helm in February last year, said in a filing with Hong Kong's stock exchange announcing the results.

"We remain alert to risks in the global economy. We are proactively managing costs and investment in line with this more uncertain outlook and will continue to do so," he added.

Shares in the bank were down 0.07 percent at HK$68.2 when Hong Kong markets opened for afternoon trading, paring sharper losses seen before the break.

Flint's progress in bringing costs more under control will be welcomed by investors especially given revenue gains outpaced cost increases in the first three months of the year.

The Asia-centric bank had failed to live up to its pledge to produce positive jaws last year.

Analyst Dickie Wong from Kingston Securities said Flint's arrival had injected some fresh energy into the bank and a tighter leash around costs.

"A new person, a new style, brings in a new atmosphere," he said, using a Chinese idiom.

Adjusted operating expenses rose 3.2 percent in the quarter, compared with a 5.6 percent increase in the same period last year.

HSBC saw a profitable 2018 but it suffered a tough final quarter when it took a hit from uncertainty over Brexit and the long-running trade row between Washington and Beijing.

Overall, last year saw strong growth for HSBC with net profit ballooning 30 percent to $12.6 billion.

But the yearly growth figures were dampened by a tough final quarter when the markets -- especially those in Hong Kong and China -- went into meltdown over global trade fears.

It's "time for the organisation to get back into growth mode," Flint said in recent video produced by HSBC detailing his first year in office.

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