“Conservative” and “cautious” are not words commonly associated with a strong quarter in the financial sector. But the approach has worked for HSBC chief executive Noel Quinn. First-quarter net profits beat expectations, thanks partly to a release of bad debt provisions. Amid such proof of prudence you could overlook rising risks to capital.

HSBC has proved it can turn a consistent profit in Asia, which accounted for most of first-quarter earnings. Profit before tax rose 79 per cent to $5.8bn at the UK-listed lender, which maintained a strong 15.9 per cent ratio of core equity tier one capital to risk-weighted assets.

Thanks to Asia, the wealth and asset management unit increased its return on tangible equity to 18.8 per cent, the highest divisionally. Total ROTE for HSBC rose 6 percentage points to 10.2 per cent. Wealth management remains key to hitting a medium-term target of 10 per cent or higher.

Last year HSBC made more than 80 per cent of Asia profits from mainland China and Hong Kong. Just 42 per cent of capital was allocated to Asia, though. The bank is therefore redeploying $100bn of RWAs from a total of $847bn. A cohort of senior executives is moving from London to Hong Kong.

Extra Asian firepower should bring HSBC higher returns. But the fresh capital will bear steeper political risks. Beijing squashes independent-minded businesses. Its relationship with HSBC is ambivalent. Hong Kong is a valuable but contentious territory to dominate financially.

It all amounts to hefty diplomatic responsibilities for a few HSBC executives. Foremost among them is Asia-Pacific chief Peter Wong, a member of the Chinese People’s Political Consultative Conference, a key Beijing advisory body. The closer Wong and colleagues edge towards the Chinese government, the higher UK and US eyebrows will rise.

The shares are up 62 per cent from their September low. At 0.7 times tangible book value they are well ahead of Standard Chartered stock. Quinn is right to double down on Asia. But investors who go along for the ride should be braced for likely political volatility.

The Lex team is interested in hearing more from readers. Is HSBC a good investment? Please tell us what you think in the comments section below.