HSBC reported a 48 percent year-on-year drop in pre-tax profits and increased its reserve for in anticipation of loan losses fuelled by the ongoing pandemic and volatile oil prices.
The British lender registered $3.23 billion of quarterly pre-tax profits, falling short of the average analyst forecast of $3.67 billion. It also upped loan loss provisions by $2.4 billion to $3 billion attributing the headwinds to coronavirus and oil, citing «a significant charge related to a corporate exposure» – a likely reference to reported recent troubles with oil trader Hin Leong.
Revenue was down 5.1 percent to $13.69 billion and operating expenses also fell 4.5 percent to $7.85 billion.
Expect 2020 Profit Decline
According to an HSBC statement, the outlook for world economies in 2020 has «substantially worsened in the past two months» and warned of the potential for more bad loans and weaker margins from lower rates. «[Expect] materially lower profitability in 2020», the statement added.
On dividends – a thorny issue from the bank which has faced outrage from disappointed Hong Kong retail shareholders – the bank will review «at or ahead of [HSBC’s] year-end results for 2020».
