Tuesday, December 1, 2020
Latest News from Cambridge and England


HSBC profit nearly halves due to coronavirus outbreak

HSBC profits nearly halved in the first quarter after the bank was forced to put aside $3bn (£2.4bn) to help cover potential defaults by customers affected by the Covid-19 outbreak.

The loan loss provisions were far worse than the $1.8bn expected by analysts and $2.4bn higher than in the same period last year, as the economic outlook deteriorated across key markets, including Hong Kong and the UK. It sent pretax profits tumbling by 48% to $3.2bn for the three months to March.

HSBC said the extra charges were mainly due to the “global impact of Covid-19 and weakening oil prices”, but warned of further difficulties ahead. It also said fraud could rise during the crisis, leading to “potentially significant” loan loss charges.

“The outlook for world economies in 2020 has substantially worsened in the past two months. The impact and duration of the Covid-19 crisis will likely lead to higher ECL [expected credit losses] and put pressure on revenue due to lower customer activity levels and..

By admin , in Money , at April 28, 2020

HSBC profits nearly halved in the first quarter after the bank was forced to put aside $3bn (£2.4bn) to help cover potential defaults by customers affected by the Covid-19 outbreak.

The loan loss provisions were far worse than the $1.8bn expected by analysts and $2.4bn higher than in the same period last year, as the economic outlook deteriorated across key markets, including Hong Kong and the UK. It sent pretax profits tumbling by 48% to $3.2bn for the three months to March.

HSBC said the extra charges were mainly due to the “global impact of Covid-19 and weakening oil prices”, but warned of further difficulties ahead. It also said fraud could rise during the crisis, leading to “potentially significant” loan loss charges.

“The outlook for world economies in 2020 has substantially worsened in the past two months. The impact and duration of the Covid-19 crisis will likely lead to higher ECL [expected credit losses] and put pressure on revenue due to lower customer activity levels and reduced global interest rates.”

The bank said it plans to cut costs to help offset an expected drop in revenue and is bracing for a material drop in profitability in 2020. However, it has temporarily halted the majority of redundancies linked to its turnaround plan – which was expected to lead to about 35,000 job losses.

In February, HSBC said it might have to put aside about $600m to cover the costs of bad debts arising from the pandemic. At that time, the disease was still largely contained in Asia and affecting the banks largest market, Hong Kong.

HSBC said there was a heightened risk that businesses in some sectors may struggle to repay their debts.

In the first stages of the outbreak, companies involved in the oil and gas industries, and the transport and consumer sectors have been hardest hit. But HSBC said the long-term impact of the outbreak on some industries was “uncertain” and may not be accounted for in its forecasts.

READ MORE FROM SOURCE: https://www.theguardian.com/business/2020/apr/28/hsbc-profit-coronavirus-outbreak-world-economies

Comments