HSBC 1st-half profit plunges 65% on loan provisions

LONDON/HONG KONG (Reuters) — HSBC posted a 65 percent tumble in first-half pre-tax profit, more than expected, as the coronavirus pandemic and its impact on businesses forced the Asia-focused bank to boost its loan-loss provisions.

Europe’s biggest bank by assets reported a pre-tax profit for the first six months this year of $4.32 billion, down from $12.41 billion in the same period a year earlier, according to its financial statement filed with the stock exchange. The profit was lower than the $5.67 billion average of analysts’ estimates compiled by the bank.

HSBC’s results reinforced the trend of lenders across the world increasing their buffers to absorb souring loans at a time when companies — from aviation to retail and hospitality sectors — are reeling from the impact of the COVID-19 pandemic.

The bank’s credit impairment provisions in the first-half soared to $6.9 billion, compared to $1 billion the same period a year earlier, the filing showed.

It had set aside $3 billion to cover loan losses in the first quarter.