HSBC Shares Rise as Profit Beats Expectations

Logo of HSBC bank
Adam Jeffery | CNBC
Logo of HSBC bank

HSBC reported first quarter underlying profit before tax of $7.6 billion, a jump of 34 percent over the same period last year, as the bank cut costs and reduced charges for bad debts.

The shares were 1.8 percent higher after the earnings release.

"We've had a good start to the year, with growth in reported and underlying profit before tax. These results demonstrate our progress in implementing the strategy we set out in May 2011," CEO Stuart Gulliver said.

"Loan impairment charges were lower in every region, notably in North America. Our continued focus on cost management contributed to an improvement in our underlying cost efficiency ratio," he added.

Paul Kavanagh, partner and senior market strategist at Killick & Co. told CNBC it was all about controlling costs as the bank undertakes a three-year restructuring plan and

HSBC reported profit before tax of $8.43 billion for the first quarter, better than the $8.1 billion expected by analysts. But according to Kavanagh, the underlying profit was more relevant for investors because it excluded one-off items.

HSBC also said its core tier-one capital ratio had strengthened to 12.7 percent from 12.3 percent.