Covid slashes profit at HSBC

HSBC has seen profits dive 65% as it battles the coronavirus downturn. The UK’s biggest bank posted pre-tax profits of £3.2billion for the half year to June 30, down from £9.5bn a year ago.

While HSBC has its headquarters in London, more than half of its profits come from Hong Kong.

The fall was much larger than analysts had forecast as the bank was hit by bad loans and low interest rates.

HSBC has given more than 700,000 payment holidays on loans, credit cards and mortgages, while setting aside a £2.9bn provision for credit losses as it expects more people and businesses to default on their repayments. This is up from £420m in the same period last year.

Group chief executive Noel Quinn said: “Our first-half performance was impacted by the Covid-19 pandemic, falling interest rates, increased geopolitical risk and heightened levels of market volatility.”

Plans to slash its global workforce by 35,000, announced in February, were initially put on hold during the Covid outbreak but these are now back on the agenda. Quinn said the bank will “accelerate implementation” of its redundancy plans because the “operating environment has changed significantly since the start of the year”.

He added: “We will also therefore look at what additional actions we need to take in light of the new economic environment to make HSBC a stronger and more sustainable business.”

Nicholas Hyatt, equity analyst at Hargreaves Lansdown, said: “HSBC follows the recent trend with massive provisions for future bad loans knocking profits hard in the first half. There’s likely more of that to come, and with low interest rates dragging on, revenues and full-year profits will not be pretty.”

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