* Q1 profit before tax $5 bln versus $6.1 bln a year ago
* CET1 ratio at 14.3 pct vs 13.7 pct consensus
* CFO says U.S. deferred prosecution affects capital plans
* London shares rise more than 3 percent
(Adds London share reaction, Brexit comment)
HONG KONG/LONDON, May 4 (Reuters) - HSBC Holdings Plc
reported a better than expected first-quarter profit
and capital position on Thursday, benefiting from an improved
performance from its core operations and the return of cash from
its U.S. unit.
The bank's common equity tier 1 ratio -- a key measure of
its financial strength -- was 14.3 percent at the end of the
March quarter, up from 11.9 percent in the same period last year
and better than the 13.7 percent expected by analysts.
HSBC's shares rose 3 percent in London on Thursday,
outperforming a 1 percent rise in the STOXX European banks index
and following an earlier 2 percent rise in Hong Kong.
HSBC is still Europe's biggest bank despite slimming down in
recent years. Along with U.S. rivals such as JPMorgan
and Citi, it remains one of a handful of players to offer
retail and investment banking services across the globe.
HSBC Chief Financial Officer Iain Mackay ruled out a fresh
share buyback in the short term as a means of using some of its
excess capital, after the bank said it completed a previously
announced $1 billion share buy-back in April.
"We've just finished one, we need to catch our breath a
little bit," Mackay told Reuters on Thursday.
Mackay also reiterated the bank's stance that it will hold
its dividend steady for now, quashing shareholders' hopes that
the lender's robust capital levels would see it boost payouts.
HSBC is expected to receive a further capital boost as it
repatriates some $8 billion currently stuck in its U.S.
subsidiary, following approval by the Federal Reserve last year
of its plans to begin the process.
Mackay however said the bank's deferred prosecution
agreement with the U.S. Department of Justice may complicate
those plans, confirming a Reuters report last September.
Addressing another of the issues facing major banks, HSBC
Chief Executive Stuart Gulliver said that the bank's previous
estimate that around 1,000 staff would move to Paris following
Britain's vote to leave the EU, was based on a 'hard Brexit'
Shareholders at the bank's annual meeting last week
overwhelmingly voted in favour of re-electing Gulliver to the
lender's board, in an affirmation of his strategy in recent
years to shrink and refocus the bank.
Gulliver and outgoing Chairman Douglas Flint have sought to
unwind much of the empire-building of their predecessors since
their appointments in 2010 - a response to a tough environment
of low interest rates and increased regulation.
Flint will be replaced by AIA Group boss Mark
Tucker in October, while Gulliver is due to leave next
HSBC said pretax profit for the first three months of the
year fell to $5 billion, down from $6.1 billion a year ago but
better than the $4.3 billion expected on average by analysts
according to the bank's own survey.
The profit decline was due to a change in the accounting
treatment of the fair value on its debt and because its year-ago
earnings included the operating results of the Brazil business
that it sold in July, HSBC said.
Revenue in the quarter dropped 13 percent to $13 billion.
However, the bank's adjusted profit before tax, excluding
the exceptional items, rose 12 percent in the quarter to $5.9
In the first quarter HSBC said it had increased customer
lending by 17 percent over the same period last year and assets
under management by 15 percent in China's Pearl River Delta, a
key plank of the management duo's strategy to refocus on Asia.
Reuters reported earlier this month the bank's progress in
attracting individual customers in the region has been slower
In response to a question on the matter, HSBC's Mackay said
the bank is not close to where it wants to be on that growth but
is making good progress expanding loans and mortgages.
(Reporting by Sumeet Chatterjee and Lawrence White; Editing by
Edwina Gibbs and Keith Weir)