HSBC, the largest bank of the United Kingdom but with its roots deeply entrenched in eh Asian market, reported a 65 per cent year-over-year drop in its pre-tax profits for the first six months of 2020 with the bank setting aside more funds for anticipated potential loan losses that could take place due to the anticipated global recession caused by the novel coronavirus pandemic.
In the first half of the current year, compared to the profit before tax $12.41 billion that was reported for the same period a year ago, the largest bank in Europe by assets, reported a profit before tax of $4.32 billion. That was much lower than analysts’ expectations of $5.69 billion.
A drop of 9 per cent in revenue, at $26.7 billion was reported by the bank during the same period. That was a little more than the expectations of the market, at $26.41 billion which corresponded to estimates compiled by HSBC.
The results caused a more than 4 per cent drop in the shares of the company in Hong Kong.
The bank was “impacted by the Covid-19 pandemic, falling interest rates, increased geopolitical risk and heightened levels of market volatility,” said the bank’s Chief Executive Noel Quinn.
“The first six months of 2020 have been some of the most challenging in living memory. Due to the Covid-19 pandemic, much of the global economy slowed significantly and some sectors drew to a near total halt,” he said in a statement issued along with the earnings report.
One of the challenges that the bank will need to handle over the long term will be the tensions between the United States and China, He also said.
“Current tensions between China and the US inevitably create challenging situations for an organisation with HSBC’s footprint,” he added.
Prior to the reporting of numbers by HSBC, a number of other British banks that reported results also reported a slash in profits for the quarter. A 33 per cent drop in first-half profits, at $1.63 billion, was reported by British bank Standard Chartered – another bank that is very Asia dependent.
The bank will also now accelerate the implementation of the restructuring plans that were announced in February, Quinn said. Reduction in the number of physical branches of the bank in eh United States, cutting its European equity business and merging its retail banking and wealth management units will be part of the restructuring process, the CEO said.
HSBC had announced in February that the restructuring plan will also involving loss of about 35,000 jobs.
“We are moving forward with these plans wherever we can,” said Quinn. “At the same time, our operating environment has changed significantly since the start of the year. We will also therefore look at what additional actions we need to take in light of the new economic environment.”
The two major challenges that are outside of the control of HSBC are the impact of the novel coronavirus pandemic on the global economy and business and the rising tensions between the US and China, said Jackson Wong, asset management director at Amber Hill Capital.
(Source:www.cnbc.com)
In the first half of the current year, compared to the profit before tax $12.41 billion that was reported for the same period a year ago, the largest bank in Europe by assets, reported a profit before tax of $4.32 billion. That was much lower than analysts’ expectations of $5.69 billion.
A drop of 9 per cent in revenue, at $26.7 billion was reported by the bank during the same period. That was a little more than the expectations of the market, at $26.41 billion which corresponded to estimates compiled by HSBC.
The results caused a more than 4 per cent drop in the shares of the company in Hong Kong.
The bank was “impacted by the Covid-19 pandemic, falling interest rates, increased geopolitical risk and heightened levels of market volatility,” said the bank’s Chief Executive Noel Quinn.
“The first six months of 2020 have been some of the most challenging in living memory. Due to the Covid-19 pandemic, much of the global economy slowed significantly and some sectors drew to a near total halt,” he said in a statement issued along with the earnings report.
One of the challenges that the bank will need to handle over the long term will be the tensions between the United States and China, He also said.
“Current tensions between China and the US inevitably create challenging situations for an organisation with HSBC’s footprint,” he added.
Prior to the reporting of numbers by HSBC, a number of other British banks that reported results also reported a slash in profits for the quarter. A 33 per cent drop in first-half profits, at $1.63 billion, was reported by British bank Standard Chartered – another bank that is very Asia dependent.
The bank will also now accelerate the implementation of the restructuring plans that were announced in February, Quinn said. Reduction in the number of physical branches of the bank in eh United States, cutting its European equity business and merging its retail banking and wealth management units will be part of the restructuring process, the CEO said.
HSBC had announced in February that the restructuring plan will also involving loss of about 35,000 jobs.
“We are moving forward with these plans wherever we can,” said Quinn. “At the same time, our operating environment has changed significantly since the start of the year. We will also therefore look at what additional actions we need to take in light of the new economic environment.”
The two major challenges that are outside of the control of HSBC are the impact of the novel coronavirus pandemic on the global economy and business and the rising tensions between the US and China, said Jackson Wong, asset management director at Amber Hill Capital.
(Source:www.cnbc.com)
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