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* First-half pre-tax profit $4.32 bln vs $5.67 bln street
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* Boosts 2020 bad debt charges to between $8 bln-$13 bln
* Bank takes $1.2 bln charge on software value
* Shares slide as much as 4.7% in London
(Updates with London shares)
By Lawrence White and Alun John
LONDON/HONG KONG, Aug 3 (Reuters) - HSBC Holdings PLC
warned its bad debt charges could blow past a previous
estimate to $13 billion this year and said its profits more than
halved, as the coronavirus pandemic hammered the bank's retail
and corporate customers worldwide.
The lender warned its capital reserves could deteriorate,
its revenues would come under pressure and it faced heightened
geopolitical risk as Europe's biggest bank set out a gloomier
than expected outlook for the second half of the year.
HSBC increased its estimate of the total bad debt charges it
could take this year to between $8 billion and $13 billion from
$7 billion-$11 billion, reflecting worse-than-expected actual
losses in the second quarter and expectations of a steeper
decline in the economy.
"What we have seen this quarter is quite a sharp shift in
economic outlook for the global economy, the famous 'V' has got
a lot sharper and as a result we have materially increased our
provisions," Chief Financial Officer Ewen Stevenson told
Reuters.
HSBC's shares fell 4.6% to a nerly twelve-year low as
investors digested the scale of the challenge facing HSBC, as it
grapples with a global pandemic, political unrest in its core
Hong Kong market, and low interest rates on its lending
worldwide.
The bank reported a pre-tax profit of $4.32 billion for the
first six months this year, lower than the $5.67 billion average
of analysts' forecasts.
HSBC's business in Britain has been hit particularly hard,
Stevenson said, as it took a $1.5 billion charge against
expected credit losses.
HSBC's results reinforced the trend of lenders across the
world increasing their buffers to absorb souring loans at a time
when companies - from aviation to retail and hospitality sectors
- are reeling from the impact of COVID-19.
TROUBLE AHEAD
The bank's credit impairment provisions in the first-half
soared to $6.9 billion, compared to $1 billion in the same
period a year earlier.
Impairment charges included a $1.2 billion writedown on the
value of software it owns, mainly in Europe, it said.
While HSBC's core capital ratio, a key measure of financial
strength, rose to 15% at the end of June, the bank warned the
metric would likely decline later this year as falling credit
ratings hit its risk-weighted asset ratio.
Its revenues fell 9% in the six-month period, as global
interest rate cuts and declining market values on assets in
investment banking and insurance outweighed higher trading
income.
HSBC is continuing to review its long-term dividend policy,
CEO Noel Quinn said in a statement.
The bank earlier this year halted payouts in response to a
regulatory request in Britain, infuriating many of its retail
investors who rely on it for income, particularly in Hong Kong.
Quinn told Reuters the bank's staff headcount has fallen by
some 4,000 this year after it restarted a redundancy programme
that was put on ice after the coronavirus outbreak.
The bank is aiming to cut costs by 3% this year from that
restructuring as well as lower employee spending on travel and
other items during the pandemic, he said.
Only a fifth of the around 9,000 staff in its headquarters
in London's Canary Wharf district would be able to return to
work in the near term for safety reasons, Quinn told Reuters.
(Reporting by Alun John in Hong Kong and Lawrence White in
London; Additional reporting by Noah Sin in Hong Kong; Editing
by Muralikumar Anantharaman and Louise Heavens)
