HSBC, Europe’s largest bank, is expected to report a turnaround in its bottom line for the second quarter after a surprise fall in profits in the prior three months.
The bank is scheduled to release its latest set of financial results at 12 p.m. HK/SIN.
Analyst estimates compiled by Reuters point to a rebound in pre-tax profit to $5.627 billion in the second quarter, up from the $4.755 billion in the first quarter. That would bring profit before tax in the first half of 2018 to $10.382 billion — what would be a 1.36 percent increase from the same period last year.
The expected increase in the bank’s pre-tax profit for the first six months of the year would be an improvement from the 4 percent fall seen in the first quarter.
But some are even more optimistic. Dickie Wong, executive director of Kingston Securities, said he expects HSBC to report a 5 percent gain in pre-tax profit for the six months ended June.
“I think they can make a turnaround and rebound quite significantly,” Wong told CNBC’s Emily Tan on Monday ahead of the bank’s results announcement.
“First of all, we see a clear tendency everywhere, not just in Hong Kong, for interest margin to be improving. And also, HIBOR is on a good track, so I think HSBC can make a comeback after the slight drop in the first quarter,” he added.
HIBOR, or the Hong Kong Interbank Offered Rate, is the benchmark interest rate in the city. The indicator tracks interest rates in the U.S. and has been trending upward this year.
Another indicator that investors will be watching closely is operating costs, said Wong. That’s because the bank’s bottom line in the first quarter was hurt by an increase in expenses.
HSBC’s chief executive, John Flint, announced in June that the bank plans to spend an additional $15 billion to $17 billion on areas including “growth and technology” between 2018 and 2020. Doing so would grow the bank’s cost base by “low-to-mid-single digit percentages each year until the end of 2020,” Flint said.