HSBC profit slumps 57%, hurt by coronavirus

HSBC Holdings said Tuesday its first-quarter profit plunged 57% compared with a year earlier, mainly as the global coronavirus pandemic and oil-price weakness caused higher expected credit losses and other credit impairments.

HSBC’s net profit fell to US$1.79 billion while revenue declined 5% to US$13.69 billion, said the U.K.-based bank, one of the world’s largest by assets.

“The economic impact of the Covid-19 pandemic on our customers has been the main driver of the change in our financial performance since the turn of the year,” Group Chief Executive Noel Quinn said in an earnings release.

For the first quarter, the bank’s expected credit losses increased to $3.0 billion and it also took a significant charge related to corporate exposure in Singapore, HSBC said.

The bank expects the coronavirus crisis to hurt its revenue while heightening credit risks this year. It forecasts profitability will be materially lower while risk-weighted asset growth is expected in a mid-to-high single-digit percentage.

HSBC and a host of Britain’s largest banks earlier this year agreed to cancel dividend payouts at the request of the Bank of England, a move aimed at shoring up their capital buffers against economic shocks stemming from the pandemic.

The bank said it will review its dividend policy at or ahead of the release of year-end results for 2020.

HSBC shares in Hong Kong gained 1.8% to HK$40.20 before the earnings release but have lost 34% of their value since the start of this year.

Martin Mou

Source:marketwatch.com