HSBC profits down 34%, possibly hit by Huawei incident

London- based HSBC’s profits slumped 34 percent on a yearly basis to $ 8.8 billion in 2020, which the lender attributed to factors such as the COVID- 19 pandemic and the ensuing economic challenges. But experts said that HSBC’s damaged reputation in China over the Huawei CFO’s arrest also contributed to the business slide.

They also expressed concern over the bank’s future business performance in the country, citing its damaged reputation and the chilly global economic situation, although HSBC plans to strengthen its focus on the Chinese mainland and Hong Kong markets amid a global business slowdown.

On Tuesday, the bank said that its pre- tax profit fell to $ 8.8 billion in 2020, with the bulk of its profits made in Asia.

In summarizing the business slowdown, the company pointed to a number of challenges it faced in 2020, such as the pandemic, which drove up its expected credit losses, and central banks’ interest rate cuts, which caused relevant business sectors to shrink.

Xi Junyang, a professor at the Shanghai University of Finance and Economics, told the Global Times that HSBC’s alleged handling of information to the US that led to Meng’s arrest would cause concerns among potential clients, both in China and overseas.

“It gives people the impression that the bank can’t properly safeguard the interests of its clients. This must have partly affected the bank’s business in China last year,” he said.

HSBC, however, intends to put more emphasis on the Chinese market as other global markets are still under the shadow of the pandemic. Recently, the bank announced a major reshuffle of executives, with many executive roles expected to be relocated to the bank’s historic home base of Hong Kong, according to reports.