(Alliance News) - HSBC Holdings PLC on Monday posted a first-half earnings slump and said its expected credit loss for 2020 could reach USD13 billion.
In the six months to June 30, revenue fell 8.8% year-on-year to USD26.75 billion from USD29.37 billion, the lender said. Pretax profit dropped 65% to USD4.32 billion from USD12.41 billion a year ago.
During the half, HSBC booked USD6.86 billion in expected credit losses and other impairment charges, up sharply from USD1.14 billion a year ago.
"Our first half performance was impacted by the Covid-19 pandemic, falling interest rates, increased geopolitical risk and heightened levels of market volatility. Despite this, our Asia franchise showed resilience, and our Global Markets business delivered strong growth compared with last year's first half. Having paused parts of our transformation programme in response to the Covid-19 outbreak, we now intend to accelerate implementation of the plans we announced in February. We are also looking at what additional actions we need to take in light of the new economic environment to make HSBC a stronger and more sustainable business," Chief Executive Officer Noel Quinn said.
Restructuring plans, drawn up in February, were for HSBC to cut about 15% of its global workforce during a radical cost-cutting programme.
Back to its first-half performance, HSBC's common equity tier 1 capital ratio improved to 15.0% from 14.3% a year ago and 14.7% in December.
HSBC said the "the current suspension of dividends on ordinary shares, more than offset the
impact of risk-weighted asset growth".
"We continue to face a wide range of potential economic outcomes for the second half of 2020 and into 2021, partly dependent on the extent of any potential impacts from new waves of Covid-19, the path to the development of a possible vaccine and market and consumer confidence levels. Heightened geopolitical risk could also impact a number of our markets, including Hong Kong and the UK," HSBC said looking ahead.
HSBC expects an expected credit loss charge between USD8 billion and USD13 billion for the whole of 2020.
Shares in the company were 1.9% lower at HKD34.30 each in Hong Kong on Monday.
By Eric Cunha; ericcunha@alliancenews.com
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HSBC Holdings (HSBA)