HSBC slumps as loan default fears hit profits

SHARES in HsBC slumped after it reported a fall in profits and defended its business in russia.

The stock slipped 5.5pc, or 27.75p, to 473.85p as worries over the state of the economy prompted it to hold more money back to cover bad loans.

Investors were hoping that the days of setting aside provisions were over. Banks squirreled away billions during the pandemic to prepare for economic disaster, slashing the amount available to be paid out in dividends. They began to release these sums last year, boosting their profits.

But in the first quarter of this year, HsBC set aside another £509m to cover expected loan losses, as the cost of living crisis bites. This helped push the bank’s profits for the three months to march down by more than 27pc, to £3.3bn.

But HsBC was also weighed down by falling revenues in its main market of asia. Continued lockdowns have caused business to stall in China and Hong Kong, where HsBC now makes most of its profits.

a number of international businesses have also been hit by the war in Ukraine, as public pressure has forced them to sever ties with russia.

But noel Quinn, HsBC’s chief executive, said: ‘The vast majority of our business in russia serves multinational corporate clients headquartered in other countries, and as a global bank, HsBC has a responsibility to help them manage these challenging circumstances.’

He added that sky-high inflation, started by the pandemic and worsened by the war, meant the ‘economic outlook remains uncertain’.

sanTanDer UK set aside £52m to prepare for souring loans – but profits climbed 183pc to £495m for the first quarter. The bank recently announced plans to shorten opening hours at branches.