Profits plunge 65pct at HSBC on coronavirus and HK woes

04-Aug-2020 Intellasia | Yahoo Finance UK | 6:02 AM Print This Post

The coronavirus crisis and worsening tensions between the US and China dealt a double blow to HSBC (HSBA.L) during the first half of its financial year, with pre-tax profits plunging 65 percent to $4.3bn (GBP 3.3bn).

The figure for the six months to 30 June came in well below the forecasts of analysts, who had predicted that the UK’s largest lender would pull in $5.67bn during the period.

The Asia-focused bank said on Monday that its financial performance was impacted by the coronavirus pandemic, market volatility, low interest rates, and “increased geopolitical risk.”

While HSBC is Europe’s largest bank by assets, the London-listed bank generates around half of its revenue in Asia.

“The first six months of 2020 have been some of the most challenging in living memory. Due to the COVID-19 pandemic, much of the global economy slowed significantly and some sectors drew to a near total halt,” said chief executive Noel Quinn on Monday.

The bank said that revenue during the six months fell 9 percent to $26.7bn. It also said that it may be forced to set aside up to $13bn on bad loan provisions, noting that it expected significantly more people and businesses to default on their loans.

The bank said it has given more than 700,000 payment holidays on loans, credit cards, and mortgages, amounting to over $27bn in customer relief.

Current tensions between the US and China “inevitably create challenging situations” for the bank, Quinn said.

The bank, which is one of the main conduits between Western capital markets and China, has faced staunch criticism for its public backing of Hong Kong’s new national security law, which criminalises criticism of the Chinese Communist Party.

“We will face any political challenges that arise with a focus on the long-term needs of our customers and the best interests of our investors,” said Quinn.

The bank said that it expected low interest rates across the world ushered in by central banks hoping to cushion economies from the economic effects of the pandemic were expected to put “increasing pressure” on its revenue.

https://sg.news.yahoo.com/hsbc-second-quarter-earnings-financial-results-coronavirus-hong-kong-063223267.html

 


Category: Hong Kong

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