HSBC‘s (LSE:HSBA) shares have plummeted 6% in post-Bank Holiday weekend trading. At £12.67 per share, it’s actually the FTSE 100‘s worst performer on Tuesday (5 May) after a chilly reception to Q1 trading numbers.

I won’t lie: I was pretty shocked by the decline, given the strength of some of the numbers.

Hargreaves Lansdown notes that the “first quarter was better than the headline numbers suggest,” adding that “revenue came in ahead of expectations once the noise from disposals is stripped out, helped by a strong showing in Wealth and solid fee income, while net interest income was broadly where the market expected.”

So why has the market sent HSBC’s share price lower? And is this an attractive dip-buying opportunity?

Crashed out

While revenues topped forecasts, HSBC was whacked by a couple of major problems in Q1:

• Rising operating expenses, which increased 8% year-on-year at constant currencies to $1.2bn.
• A whopping $1.3bn worth of credit impairments.

This meant that while revenue increased 6% to $18.6bn, pre-tax profit dipped 1% to $9.4bn.

The big story was that $1bn+ impairment charge, which was up $400m quarter on quarter and underlined the bank‘s vulnerability to the Middle East crisis. HSBC said $300m of the charge reflected “heightened uncertainty and a deterioration in the forward economic outlook” after the conflict started in February.

Investors also didn’t take kindly to a separate amount of $400m, a credit impairment related to a fraud case in the UK. HSBC didn’t specify the source, though the Financial Times attributed this to the collapse of Market Financial Solutions (MFS), which the bank had exposure to through its private credit operations.

On the cost front, HSBC said that “continued investment in our Wealth business, the phasing of the performance-related pay accrual… and the impacts of inflation” drove operating expenses above forecasts.

Have investors overreacted?

There could be more trouble in store as the Middle East crisis fuels inflation and hits economic growth. Investors should brace for more credit impairments and cost pressures.

Yet I can’t help but ask myself: is HSBC’s share price plunge today an overreaction? In my view, there was still a lot to really like about that Q1 statement.

Those better-than-expected revenues were helped by “strong growth in Wealth fees and other income in our International Wealth and Premier Banking and Hong Kong business segments.” The outlook across HSBC’s operations is robust as ever, as surging wealth levels across Asia drive customer activity.

What’s more, the bank hiked its net interest income (NII) forecasts thanks to the improved interest rate outlook. NII for 2026 is now expected at $46bn, up $1bn from previous forecasts.

Are HSBC shares a possible buy?

I hold HSBC stock in my portfolio. While the near-term risks might be rising, the long-term picture remains a compelling one. And following its share price plunge today, I think the FTSE 100 bank is worth serious consideration. Its shares trade on an attractive price-to-earnings (P/E) ratio of just 11 times.