HSBC’s First-Half Profit Dive Misses Analyst Forecasts

HSBC’s pre-tax profits plummeted in the first half by 65 percent year-on-year as the Asia-focused lender further boosted loan loss provisions to ready for more headwinds. HSBC registered $4.32 billion in pre-tax profits compared to $12.41 billion in the same period last year and analyst forecasts of $5.67 billion, according to compilations made by the bank.

Given the current high degree of uncertainty, we are continuing to monitor closely the implications on our business plan and medium-term financial targets, while also undertaking a review of our future dividend policy, HSBC’s chief executive Noel Quinn said in a statement.

The bank also expected total credit impairment provisions for the year to reach between $8 billion and $13 billion, higher than previous forecasts. Provisions reached $6.9 billion in the first half after the bank said aside $3 billion in the first quarter, compared to just $1 billion in the first half of 2019.

The bank also warned of expected damage to its core capital ratio as worsening credit ratings impact its risk-weighted asset ratio.

Financial and economic headwinds aside, HSBC also highlighted the risk of rising U.S.-China tensions heightened by the national security law and the Hong Kong Autonomy Act.

Like our clients, HSBC has to operate in a difficult geopolitical environment. Current tensions between China and the US inevitably create challenging situations for an organization with HSBC’s footprint, Quin added.

However, the need for a bank capable of bridging the economies of east and west is acute, and we are well placed to fulfill this role. We will face any political challenges that arise with a focus on the long-term needs of our customers and the best interests of our investors.