Apr 28, 2020

HSBC quarterly profit almost halves as loan provisions surge

Profits at HSBC nearly halved and expected loan losses for the first quarter surged more than 400 per cent due to the coronavirus crisis, prompting the bank to deliver a stark warning on future performance. The pandemic has also hit HSBC's rivals, with the six largest US lenders increasing first-quarter loan provisions by a combined $25.4bn - a year-on-year rise of 350 per cent. Noel Quinn, chief executive, described it as one of the "Deepest restructurings" in HSBC's 155-year history, which saw it double down on the bank's pivot to Asia and shrink less profitable operations in Europe and the US. Though based in London, HSBC generates more than four-fifths of its profits from Asia, in particular Hong Kong. On Tuesday, the bank said its operating expenses were $400mn lower than the same period last year at $7.9bn, but this "Included favourable foreign currency translation differences of $0.2bn". Last month, pressure from the Bank of England forced HSBC to cancel its dividend for the first time in 74 years. HSBC had been looking to bounce back in early 2020 following a pre-tax loss of $3.9bn for the fourth quarter of 2019, after taking a $7.3bn writedown on the value of its investment and commercial banks in Europe.

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