HSBC 'Sneaky' Results Make Lloyds, RBS Worth Buying: Analysts

Investors cheered HSBC first quarter results on Tuesday, but one analyst said the bank's profit-beat was misleading, and recommended RBS and Lloyds shares as better buys.

(Read More: HSBC Shares Rise as Profit Beats Expectations)

HSBC, Britain's biggest bank, reported a near doubling in pre-tax profit to $8.4 billion, better than the $8.1 billion forecast by analysts. HSBC shares rose nearly 3 percent on the news, and were among top top gainers on London's FTSE 100.

"We have 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," HSBC CEO Stuart Gulliver said.

However, Cormac Leech, bank analyst at Liberum Capital, said the bank's better-than-forecast result was "sneaky" and "slightly disappointing", as it was boosted by falling impairment charges.

"The vast majority of the beat, which is getting the market excited, is loan losses," Leech told CNBC.

"However, the underlying data is slightly disappointing if you dig into the detail. There is a sneaky 0.5 billion pound [$0.8 billion] debit adjustment on derivatives, which most people will not have picked up immediately, because it is not listed as notable item," he said.

Leech said that based on the result, he would advise investors to switch out of HSBC shares into Lloyds and Royal Bank of Scotland (RBS), both of which were bailed-out by the U.K. taxpayer during the financial crisis.

"I think the first quarter for RBS was deceptively weak. There was a certain amount of dumping assets to hit the capital improvement target they had set themselves, because they were trying to avoid doing a capital raise and it is trading on 0.6 tangible," said Leech.

"So you have an opportunity to switch out of HSBC, which is trading on 1.4, and switch into RBS, which I believe can do a 10 percent ROE [return-on-equity] at 0.6 tangible [book value]."

He added that if HSBC was to rally a further 5-10 percent, playing it from the short-side would start to become attractive.

Leech 's comments echoed those of Chirantan Barua, a senior U.K. bank research analyst at Bernstein Research. Barua is bullish on U.K. banks for the first time in years, in particular Lloyds and RBS.

(Read More: UK Banks Return to Favor in Turnaround Year)

"After years of muted growth driven, both by supply side and demand side factors, we believe 2013 will be a turnaround year," he said in a note to clients last week.

Lloyds, followed by RBS, is Barua's pick of the U.K. banks, as both stand to benefit the most from the recovery in U.K. consumer demand.

"There is a clear route to floating Lloyds and RBS now. I think a lot of the reasons why Lloyds and RBS were not investable have abated, so I think at current levels they are attractive," said Leech.

By's Jenny Cosgrave; Follow her on Twitter @jenny_cosgrave