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Market Update

Europe Earnings: HSBC Net Climb to $6.35 billion, Commerzbank Swing to Loss

Author: Nigel Thomas
Last Update: 10:35 AM ET May 07 2013

3:00 PM Frankfurt – Commerzbank said loss in the first quarter swung to €94 million. HSBC first quarter profit surged more than doubled to $6.35 billion. Hochtief agreed to sell airport division to investment board of Canada for €1.1 billion and net swung to €43.5 million profit.

In London trading, FTSE 100 index rose 0.6% or 40.1 to 6,562 and in Frankfurt the DAX index jumped 1.1% or 90.2 to 8,202.

In Paris, CAC 40 index gained 0.8% or 30.1 to 3,937.

Commerzbank AG gained 1.5% to €10.97 after the Germany based lender reported net interest income in the first quarter ending in March dropped 19.5% to €1.36 billion. Consolidated loss in the quarter swung to €94 million compared to profit of €355 million a year ago.

Operating profit declined 18.5% to €469 million and restructuring expenses jumped €493 million from €34 million.

The risk-weighted assets rose 1% to €210 billion from the previous quarter and NCA portfolio in the first quarter reduced by a further €7.3 billion.

The bank reported core tier 1 ratio declined since end of December 2012 by 0.5 percentage points to 11.5%.

G4S Plc declined 14.1% to 262.30 pence after the UK based security service provider said revenues in the first quarter ending in March climbed 7.7% and group operating margin fell 0.6% compared to the same period in 2012 and warned that profit margins in 2013 would be lower than expected

HSBC Holdings Plc jumped 2.9% to 734.50 pence after the UK based bank reported revenue in the first quarter ending in March jumped 14% to $18.42 billion. Profit for the quarter surged more than doubled to $6.35 billion compared to $2.58 billion and diluted earnings per share soared 33 cents from 13 cents a year earlier.

The bank said bad loan charges in the quarter declined 51% to $1.17 billion and pretax profit climbed 95% to $8.43 billion from $4.32 billion a year ago period. Operating costs dropped to $9.3 billion from $10.4 billion.

Reported loans and advances to customers declined by $39 billion this resulted foreign exchange differences of $25.4 billion a $1.2bn reduction in reverse repo balances and decrease in customer lending of $12.5 billion.

The bank added core tier 1 capital ratio strengthened to 12.7% from 12.3% at December 31.

Iain Mackay finance director said “you can expect us to continue to focus on our cost base”. After positioning as chief executive officer, Stuart T. Gulliver eliminated $4 billion of costs, 46,000 job cuts and sold or closed 52 businesses to revive earnings.

In February, the bank sold the stake in Shenzhen, China based insurance unit for $9.4 billion and also sale of its U.S. based credit card business to Capital OneFinancial Corp. in a premium of $2.5 billion.

Hochtief AG soared 7.3% to €57.30 after the Germany based construction group agreed to sell its airport segment AirPort GmbH, Essen to Public Sector Pension Investment Board of Canada. The transaction proceeds are nearly €1.1 billion and closing is expected in the second half of this year.

Hochtief, lifted business outlook and expects consolidated net profit between €210 million and €250 million. New orders in the quarter ending March to €5.55 billion compared to €7.69 billion a year ago period. Operating earnings EBITA to €189.1 million

Consolidated net in the quarter swung to €43.5 million profit compared with a consolidated net loss of €34.8 million in the prior-year period.

Sources: Data collected by 123jump.com and Ticker.com from company press releases, filings and corporate websites. Market data: BATS Exchange. Inc