The underlying PBT was up $3.4 billion against the previous quarter, driven by higher revenues in Global Banking and Markets, which, like others in the industry, is usually strong in the first quarter; lower loan impairment charges in North America and Europe compared with the previous quarter; and lower operating cost due to a significant decrease in the size and number of notable items.We continue to reap the benefits of investment in faster-growing markets. Reported PBT increased by 21% in Hong Kong, 24% in the Rest of Asia-Pacific and 11% in Latin America over the corresponding period in 2011. The underlying cost efficiency ratio improved from 58.7% to 55.5%, driven by increased revenues. Operating expenses were slightly higher on a constant-currency basis due to the increase in Global Banking and Markets performance-related costs. This reflects the higher revenues mentioned earlier. However, headcount fell 14,000 against the same period in 2011 and 3,500 against the end of last year. We also announced 11 transactions since the start of the year, bringing the total to 27. To conclude, we think it's a pretty good start to the year, continued growth in target areas, stable costs and a strong balance sheet. We've made progress in all areas of our strategy, including the costs. And now, Iain will talk through the financial performance in detail. Iain James Mackay Thanks, Stuart. You've all seen the statement, so I'll just cover a few keys points in detail. As Stuart said, reported profit before tax in the first quarter was down, driven by effect of movements in credit spread on fair value on debt. Underlying profit before tax for the quarter was $6.8 billion, up $1.4 billion or 25% on 2011. This reflects increased revenue in Global Banking and Markets and Commercial Banking and in faster-growing regions for Retail Bank Wealth Management and stable and impairment charges, with reduced charges in North America offsetting the effect of higher charges in Latin America. As Stuart mentioned, the estimated underlying return on equity was around 11%.
Turning to revenues. Reported revenues for the quarter were down $800 million on the same period in 2011. Excluding the effect of fair value on debt movements, revenues were $1.2 billion higher than in the corresponding quarter last year. This growth was led by Global Banking and Markets, increasing revenues by $700 million, and backed up by a strong performance in Commercial Bank, which grew by $300 million. Global Banking and Markets revenue growth was driven by strong revenue performances in foreign exchange, Balance Sheet Management and Payments and Cash Management and increased rates revenues, thanks to tightened eurozone bond spreads following ECB action, although this was partly offset by a decline in equities revenues due to markedly decreased revenues on the comparable period of last year.Revenues increased in Commercial Banking in the first quarter compared to the same period in 2011 due to higher net interest income, reflecting strong growth in Lending, particularly in the first half of last year, in Hong Kong, Rest of Asia-Pacific, Latin America and Europe; notably, the small and medium-sized enterprises in the U.K.; an increase in deposit balances in Europe, Hong Kong and the Rest of Asia-Pacific. Gains from cross-selling between Commercial Banking and Global Banking and Markets, particularly foreign exchange products, demonstrated real progress in our efforts to integrate the 2 businesses. Within Retail Bank Wealth Management, we grew net interest income in faster-growing regions and insurance revenues, mainly in Hong Kong, although these factors were partially offset by the ongoing run-off of the U.S. consumer finance portfolio. Read the rest of this transcript for free on seekingalpha.com