HSBC Reports 69 Percent Drop In First-half Profit

HSBC on Monday said profits for the first half of this year plunged by 69 percent on year as the banking giant was hammered by the coronavirus pandemic and spiralling China-US tensions.

The lender reported post-tax profits of US$3.1 billion while pre-tax profit was US$4.3 billion, a 64 percent drop on the same period last year. Reported revenue was down 9 percent at US$26.7 billion.

Chief executive Noel Quinn described the first six months of the year as "some of the most challenging in living memory".

"Our first-half performance was impacted by the Covid-19 pandemic, falling interest rates, increased geopolitical risk and heightened levels of market volatility," he said in a statement to the Hong Kong stock exchange.

Even by the standards of the current economic maelstrom engulfing global banks, HSBC has had a torrid year. 

Before the coronavirus crisis it was beset by disappointing profit growth, ground down by US-China trade war uncertainties and Britain's departure from the European Union.

The Asia-focused lender embarked on a huge cost-cutting initiative at the start of the year, including plans to slash some 35,000 jobs as well as trimming fat from less profitable divisions, primarily in the United States and Europe.

The coronavirus upended some of that cost-cutting drive with banks hammered by market volatility and the economic slowdown caused by the pandemic.

But HSBC has a further headache – geopolitical tensions via its status as a major business conduit between China and the West.

Quinn referenced the bank's growing political vulnerability in Monday's statement.

"Current tensions between China and the US inevitably create challenging situations for an organisation with HSBC's footprint," he said.

"However, the need for a bank capable of bridging the economies of East and West is acute, and we are well placed to fulfil this role," he added.

The bank's Asia operations continued to show "good resilience", Quinn said, with profit before tax of US$7.4 billion.

Earlier this year Quinn put some of the job cuts on hold as the pandemic struck.

But in Monday's statement he vowed to press ahead with the cost-cutting.

"As we seek to accelerate our transformation in the second half of the year, I am mindful of the impact it will have for some of our people, particularly those leaving us," he said. (AFP)