HSBC's private banking arm has logged a pre-tax loss of $125 million for the first three months of 2013.

The private banking segment of HSBC recorded a pre-tax loss of $125 million in the first three months of 2013, a sharp decline compared to its profit of $286 million from a year ago, and its profit of $230 million from the previous quarter.

The bank's cost/efficiency ratio surged, standing at 127.5 per cent in the first quarter of 2013 compared to 71.1 per cent in December 2012, and 64.8 per cent in March of the same year.

Commenting on the results, global head of communications Médard Schoenmaeckers, told this publication: “The first quarter loss for global private banking was caused by a number of one-off items, notably the write-off of goodwill on some non-strategic assets. Excluding the impact of these one-offs, profit before tax was marginally lower than the last quarter of 2012. Assets under management were broadly stable compared with end of December 2012.” 

HSBC banking group as a whole reported a pre-tax profit of $8.5 billion for the first quarter, which was a 95 per cent rise from last year’s profit of $4.3 billion for the same quarter. This included adverse movements of $0.2 billion on the fair value of the firm’s own debt, $2.6 billion in the first quarter of 2012, and gains of $1.1 billion from disposals and the reclassification of an associate, at $0.2 million in the first quarter of 2012.

Underlying profit before tax was recorded as $7.5 billion for the first three months of this year, a 34 per cent rise on the year before. This primarily reflected higher revenue of $0.8 billion and lower loan impairment charges of $0.9 billion, with a notable improvement in the bank’s US consumer and mortgage lending portfolio.
 
The firm had a core tier 1 capital ratio of 12.7 per cent, up from 12.3 per cent at the end of 2012, as a result of the completion of management actions and profit generation offset by the effect of regulatory changes, the bank said.

Commenting on the trading conditions and outlook for 2013, the bank said: “Although broad macroeconomic challenges persist, we expect the mainland Chinese economy to accelerate after a slower than expected start to the year. We forecast that the US will continue to outperform its peers, though the pace of growth will be slow compared with past experience. We expect that the eurozone will contract, that emerging markets will grow at around 5 per cent, and that global growth will be around 2 per cent in 2013.”

As at 31 March 2013, HSBC had $2.6 trillion of client assets.