Why are HSBC shares trading up on Tuesday?

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Shares of HSBC Holdings plc (LON: HSBA) ended about 5.0% up on Tuesday after revealing that its profit more than tripled in its first quarter.

HSBC shares up on solid Q1 results

The financial services behemoth said its profit climbed to a whopping $10.33 billion in the recently concluded quarter on the back of tighter monetary policy globally.

Consequently, a meaningful benefit to net interest income pushed revenue up 64% versus the year ago to $20.17 billion. In the earnings press release, CEO Noel Quinn said:

Our profits were spread across our major geographies, and all three global businesses performed well as we continued to meet customers’ needs through our intentionally connected franchises.

The British multinational remains committed to at least 12% return on average tangible equity for 2023 onwards. Versus their year-to-date high, HSBC shares is down about 8.0% at writing.

HSBC resumes dividend payments

Shareholders are happy also because HSBC resumed its dividend today after nearly four years. Its board declared 10 cents a share in payout and disclosed plans of repurchasing up to $2.0 billion worth of stock as well.  

Also on Tuesday, the universal bank said its takeover of Silicon Valley Bank UK resulted in a $1.5 billion provisional gain. According to the Chief Executive:

With the SVB UK acquisition, we have access to more of the entrepreneurs in tech and life sciences sectors who’ll create businesses of tomorrow. They’re a natural fit for HSBC and we’re placed to take them global.

Wall Street currently has a consensus “buy” rating on HSBC shares and sees upside in it to nearly $50 on average – about a 35% premium on its current price.

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