Europe’s largest lender, HSBC, reported first-quarter pre-tax profit of $9.4 billion on Tuesday, missing analysts’ estimates on the back of higher expected credit losses and other impairment charges.

HSBC’s revenue gained 6% year-on-year, exceeding estimates, on stronger wealth fees and other income.

Here are HSBC’s first-quarter results compared with the consensus estimates compiled by the bank.

• Pre-tax profit: $9.37 billion vs. $9.59 billion
• Revenue: $18.62 billion vs. $18.49 billion

The lender, whose first-quarter profit before tax fell 1% year-on-year, saw shares in Hong Kong drop 4.6%. Its U.K.-listed shares were last trading 5.5% lower.

Expected credit losses of $1.3 billion were $400 million higher compared with the same period a year earlier — 9% worse than consensus estimates, according to a Citi report.

The credit losses were linked to “fraud-related” exposure to a financial sponsor in the UK and provisions owed to increased uncertainty and a worsening economic outlook due to the conflict in the Middle East, HSBC said in a statement.

“I feel quite comfortable that at a $1.3 billion charge based on what we know today and the forward outlook we have of various downside plausible scenarios, we are well provided for,” HSBC Chief Financial Officer Pam Kaur told CNBC’s “Access Middle East” on Tuesday.

HSBC said in its statement that it was on course to deliver $1.5 billion in annualized cost reduction by the end of June 2026. “Through the privatisation of Hang Seng Bank, we expect to realise $0.5bn in pre-tax revenue and cost synergies across both our brands in Hong Kong by the end of 2028.”

The lender completed the privatization of Hang Seng Bank on Jan. 26, with the latter’s shares subsequently delisted from the Hong Kong Stock Exchange. HSBC expects to see some synergy growth to start in the second half of this year, Kaur said in the earnings call.

HSBC’s net interest income rose 8% in the first quarter, year on year, to $8.9 billion, as did operating expenses, also up 8%, owing to the impacts of inflation, forex, higher planned spending and performance-related pay.

The lender highlighted risks due to the Middle East conflict, including higher oil prices, sharper inflation, a significant slowdown in GDP, warning that if those factors came into play there could be a “mid-to-high single digit percentage” negative impact on its profit before tax.

While HSBC maintained its targeted return on tangible equity — a measure of profitability — of 17%, it warned that should the adverse impact from the Middle East crisis materialize, it could bring RoTE, excluding notable items, below 17% in 2026. Annualized RoTE in the reported quarter, excluding items, was 18.7%.

The RoTE forecast does not appear to be a major concern as the bank is already well ahead of the medium-term guidance of over 17%, Citi said.

The HSBC board also approved its first interim dividend for 2026 of 10 cents per share.

Malaysia and Indonesia blocked access to Elon Musk’s artificial intelligence chatbot Grok over the weekend due to concerns that the tool was being used to generate non-consensual, sexually explicit and obscene content. 

Malaysian regulators ordered temporary restrictions be placed on the chatbot from xAI on Sunday following “repeated failures by X Corp” to address content risks associated with the AI tool.

The move came just one day after Indonesia stepped in to deny access temporarily to Grok due to similar concerns and asked X officials to clarify on the matter, according to CNBC’s translation of the statement.

The Southeast Asian countries’ actions come after it was discovered that xAI’s Grok enabled users to easily generate and share images online that included nonconsensual explicit images, and child sexual abuse material (CSAM).

A UK watchdog, the Internet Watch Foundation, told NBC News that it had seen dark web users sharing “criminal imagery” they said were created using Grok, depicting pictures of underage girls virtually undressed.

Wired also reported that Grok has been used to virtually strip women in photos who were wearing modest, religious clothing like hijab, saris and nun’s habits.

Musk’s company had recently updated its Grok Imagine features, enabling easier image generation from text-based prompts on the platform, which is integrated with Musk’s social media platform X, giving it a wide reach. 

Amid escalating concerns over Grok’s content moderation policy, xAI announced it would limit image generation and editing features to paying subscribers, in an effort to patch safeguard gaps that permitted sexualized outputs. 

Musk, responding on X, has also asserted that users creating illegal content via Grok would face consequences equivalent to uploading such material directly to the social media platform.

CNBC attempted to reach out to xAI for comment regarding the developments over the weekend. A press email for the company returned an automatic message that read “Legacy Media Lies.”

BEIJING — Huawei spinoff Honor announced Tuesday it plans to launch smartphone sales in Indonesia by the end of March, becoming the latest Chinese company to enter a market that has banned Apple’s iPhone 16 over domestic production requirements.

Indonesia requires that for smartphones sold in the country, 40% of their components must be domestically sourced. That rule has prevented Apple from selling its newest phone in the market, where it is reportedly negotiating a $1 billion investment.

Honor has an office in Indonesia and is working with one local manufacturing partner, Justin Li, the Chinese company’s president of South Pacific operations, told reporters last week. He said a folding phone will be among Honor’s first set of locally sold products — 10 items in the medium to high-end segment.

The company aims to offer around 30 products from phones to tablets in Indonesia by the end of the year. The Southeast Asian country is home to the world’s fourth-largest country by population, just behind the United States.

“Although 80% of the market is dominated by devices priced under $200, as Southeast Asia’s largest and fastest-growing economy, Indonesia presents immense potential for long-term growth,” Canalys analyst Chiew Le Xuan said in an email.

“Indonesia is emerging as a key market in Southeast Asia, driven by rapid economic growth and an expanding middle class,” Chiew said, noting the country accounts for 35% of smartphone shipments in the region and can serve as a strategic regional hub.

As of November, Oppo, Xiaomi and Transsion — all China-based — held the top three spots in Indonesia by smartphone shipments, according to Canalys. Shenzhen-based Oppo in November held its global launch for its flagship Find X8 phone in Indonesia, where the company also has a factory.

Samsung ranked fourth in Indonesia with a 16% share, tied with Vivo, another Chinese brand, the Canalys data showed.

Excluding China and Japan, just under 8% of Apple’s sales come from Asia-Pacific.

Li claimed the decision to enter Indonesia was independent of Apple’s presence in the country, and was confident in Honor’s ability to compete. He said Honor had observed the Indonesian market for years, before doubling down on expansion efforts in the last half year.

While he declined to share a current breakdown of Indonesian to Chinese staff, Li said Honor is still hiring in the country and aims to have a predominately local staff in the future.

Honor plans to open at least 10 of its own stores in Indonesia this year, in addition to selling through a local retailer, Li said.

Outside of China, Honor primarily sells in Europe and parts of Southeast Asia. Its phones are not directly sold in the U.S. The company claimed that in December, more than half of its sales came from outside China for the first time.

Honor, which is planning to go public, was spun off from Chinese telecommunications giant Huawei in November 2020 after the parent company was hit by U.S. sanctions. Huawei said it does not hold any shares in Honor or have involvement in business decisions.

The Indonesian government expects Apple to increase its proposed $100 million investment into the country, according to state media, as the iPhone maker seeks clearance from Jakarta to sell its latest phones.

The American tech giant’s latest smartphone model doesn’t meet Indonesia’s 40% domestic content requirements for smartphones and tablets and hasn’t been granted clearance to be sold in the country. 

The purpose of the ban is to protect local industry and jobs, with officials asking Apple to increase its investments and commitments to the economy in order to gain greater access. 

According to a report from Indonesian state media, the country’s Ministry of Industry met with representatives from Apple on Thursday regarding its proposal to invest $100 million over two years. 

The funds would go toward a research and development center program and professional development academy in the country, as per the report.

The company also plans to produce accessory product components, specifically mesh for Apple’s AirPods Max, starting in July 2025, it added.

Apple didn’t immediately respond to a request for comment from CNBC.

While the new offer is 10 times larger than a proposal that was reported earlier, the government is still striving to sweeten the deal to get a “fair” commitment.

“From the government’s perspective, of course, we want this investment to be larger,” industry ministry spokesperson Febri Hendri Antoni Arif told state media on Thursday.

He said that a larger investment would help the development of Indonesia’s manufacturing sector, adding that its domestic industry was capable of supporting production of Apple devices such as chargers and accessories.

While Indonesia represents a small market for Apple, it also offers growth opportunities as it has the world’s fourth-largest population, according to Le Xuan Chiew, a Canalys analyst focusing on Apple strategy research.

“Its young, tech-savvy population with growing digital literacy aligns with Apple’s strategy to expand [global sales],” he said, noting that it also offers potential for manufacturing and assembly that supports Apple’s efforts to diversify its supply chain. 

Success in this market requires a long-term approach, and Apple’s investment offer demonstrates a commitment to complying with local regulations and paving the way for future growth, he added.

Shopee and its courier service Shopee Express admitted to breaching a competition rule in Indonesia and has agreed to adjust its current practices, the country’s watchdog said on Wednesday.

Shopee is the e-commerce arm of Southeast Asian tech giant Sea Limited.

“Shopee and Shopee Express admitted that they had violated Law no. 5 of 1999, regarding delivery (courier) services on the Shopee platform by agreeing to various behavioral change points determined by the KPPU Council in the hearing yesterday,” Indonesia Competition Commission Komisi Pengawas Persaingan Usaha said in a Google-translated statement.

KPPU said Shopee proposed adjustments to its current practices on June 20 which were approved by the commission council.

“Shopee Indonesia attended a meeting with KPPU on 25 June to discuss points of the integrity pact that was shared by KPPU last week. On 20 June, Shopee proposed changes to our user interface to enhance our services and demonstrate our compliance in providing the best services to our users, in accordance with the feedback provided and approved by the KPPU,” Radynal Nataprawira, head of public affairs at Shopee Indonesia, told CNBC in emailed comments.

“Shopee is always committed to complying with all applicable regulations and laws in the Republic of Indonesia in conducting our business operations,” said Nataprawira.

Last month, KPPU revealed its preliminary investigation found that Shopee allegedly prioritized Shopee Express in every package delivery to consumers.

The watchdog also accused Shopee of “discriminatory behavior,” saying Shopee Express and another delivery service J&T Express were “automatically activated en masse on the seller dashboard” while other companies that also have good service performance did not get selected automatically.

KPPU investigators also named an employee who held director positions in both Shopee Indonesia and Shopee Express, saying this “dual position” has the ability to influence competition and control the behavior of both companies.

KPPU is also probing Shopee rival Lazada, the Southeast Asian e-commerce arm of Chinese tech giant Alibaba, saying it has found indications of similar violations.

“If it is later proven to have violated, Lazada can be subject to a fine of a maximum of 50% of the net profit or 10% of the total sales it earned in the relevant market during the period of the violation,” KPPU said in a statement last month.

Nvidia is planning to build a $200 million artificial intelligence center in Indonesia in partnership with local telco giant Indosat Ooredoo Hutchison, as the U.S. tech darling continues its push into Southeast Asia. 

According to Indonesia’s Communication and Information Technology Minister, Budi Arie Setiadi, the new facility will be based in the city of Surakarta in the Central Java province and will bolster local telecommunications infrastructure, human resources, and digital talent.

Indosat did not respond to a request for comment, while Nvidia declined to comment on the matter.

Last month, Indosat announced that it was ready to integrate Nvidia’s next-generation chip architecture, Blackwell, into its infrastructure, with “the goal of propelling Indonesia into a new era of sovereign AI and technological advancement.”

Indosat Ooredoo Hutchison is Indonesia’s second-largest mobile telco after a 2022 merger between Qatar’s Ooredoo and Hong Kong’s CK Hutchison.

Nvidia’s increased presence in Indonesia represents a broader push into Southeast Asia this year as data demand in the region booms on the back of the growing digital economy.

In January, Singapore telco provider Singtel announced its partnership with Nvidia to deploy artificial intelligence capabilities in its data centers across Southeast Asia. 

Singtel said in March that the initiative would provide businesses in the region with access to Nvidia’s cutting-edge AI computing power by this year, without the need for clients to invest in and manage their own expensive data center infrastructure.

Southeast Asia has proved to be a major revenue driver for Nvidia. A U.S. Securities and Exchange Commission filing last year showed that about 15% or $2.7 billion of the company’s revenue for the quarter ended October came from Singapore. 

Singapore trailed the U.S., which generated 34.77% of Nvidia revenue, Taiwan with 23.91%, and China and Hong Kong, at 22.24% in sales rankings that quarter.

Revenue from the small nation-state that quarter represented a 404.1% increase from the $562 million recorded in the same period the previous year, outpacing Nvidia’s overall revenue growth and putting it as the company’s fourth largest market. 

According to Nvidia’s latest blowout quarterly earnings report, data centers comprised the majority of its revenue, generating $18.40 billion on the back of global AI euphoria.

— CNBC’s Sheila Chiang contributed to the report.

LONDON — Global dividend payouts to shareholders hit a record $1.66 trillion in 2023, according to a new report by British asset manager Janus Henderson.

The Global Dividend Index report, published Wednesday, said payouts rose by 5% year-on-year on an underlying basis, with the fourth quarter showing a 7.2% rise from the previous three months.

The underlying figure adjusts for the impact of exchange rates, one-off special dividends and technical factors related to dividend calendars, along with changes to the index.

The banking sector contributed almost half of the world’s total dividend growth, delivering record payouts as high interest rates boosted lenders’ margins, the report found.

Last year, major banks including JPMorgan Chase, Wells Fargo and Morgan Stanley announced plans to raise their quarterly dividends after clearing the Federal Reserve’s annual stress test, which dictates how much capital banks can return to shareholders.

“In addition, lingering post-pandemic catch-up effects meant payouts were fully restored, most notably at HSBC,” Janus Henderson’s report added.

“Emerging market banks made a particularly strong contribution to the increase, though those in China did not participate in the banking-sector’s dividend boom.”

However, the positive impact from banking dividends was “almost entirely offset by cuts from the mining sector,” according to Janus Henderson.

The report noted that large dividend cuts by some major companies such as BHP, Petrobras, Rio Tinto, Intel and AT&T diluted the global underlying growth rate for the year by two percentage points, masking significant broad-based growth in many parts of the world.