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$HBC Profits Nearly Double as Writedowns Decline

HSBC Holdings Plc (HSBA)Europe’s largest bank, posted a bigger-than-estimated increase in first-quarter profit after provisions for bad loans shrank, stirring speculation the lender may step up its cost-reduction targets.

Pretax profit increased to $8.43 billion from $4.32 billion in the year-earlier period, the London-based bank said in a statement today. That beat the $8.04 billion average estimate of nine analysts surveyed by Bloomberg (HSBA). Bad loan charges declined 51 percent to $1.17 billion, HSBC said.

Stuart Gulliver has eliminated $4 billion of costs since becoming chief executive officer in 2011, beating his initial target. He’s announced 46,000 job cuts and sold or closed 52 businesses to revive earnings. That’s prompted speculation among analysts he may set a tougher expense-reduction goal when when he updates investors on the bank’s strategy on May 15.

“The true underlying revenue picture is flat, so it makes sense that they would look to the cost side again,” said Simon Willis, an analyst at Daniel Stewart Securities Plc (DAN) whose hold rating on the bank is under review….”

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