HSBC’s first half of the year is not looking good amidst the continuous blow of the pandemic to various sectors, including banks. This could potentially “accelerate” the overhaul plans of the company, which was announced before the pandemic.
Down by more than half
HSBC reported a year-after-year dive of 65 percent for the pre-tax profit amounting only to $3.4 billion compared against the same period for 2019 amidst a decrease in revenue and worsening credit losses. The profit is way below the analysts’ expectations of $5.69 billion.
This came as UK’s largest bank set funds aside for future potential loan losses in the coronavirus pandemic. HSBC set aside $8 billion to $13 billion in anticipation to bad loans with the continuous struggle of businesses amidst the pandemic.
Revenue for the London-based firm saw a drop of 9 percent for the same timeframe, to $26.7 billion. It was much better than projection of analysts at $26.41 billion.
Challenging first half
“Our first half performance was impacted by the COVID-19 pandemic, falling interest rates, increased geopolitical risk, and heightened levels of market volatility,” according to a statement from the firm’s chief executive officer Noel Quinn.
Although based in UK, HSBC is also big in Asia where it gets half of its money. Quinn explained that the “current tensions between China and the US inevitably create challenging situations for an organization with HSBC’s footprint.” The bank was even accused of cooperating with the US to frame Chinese tech giant Huawei, allegations denied by the lending company.
“The first six months of 2020 have been some of the most challenging in living memory. Due to COVID-19 pandemic, much of the global economy slowed significantly and some sectors drew to a near total halt,” the bank’s CEO said.
Before the emergence of the novel coronavirus, HSBC was already dealing with difficult financial situations, which included slashing out workforce and removing about 35,000 jobs. The bank was also reported that they are also considering selling its retail banking operations in the US.
With low profit from last year, the firm aimed to restructure the company announced earlier this year, which could now be furthered by the health crisis, and also think of “additional actions we need to take in light of the new economic environment.”