HSBC's First Quarter Profits Tumble 48 Percent

HSBC on Tuesday said first quarter pre-tax profits almost halved as the banking giant was battered by the global coronavirus pandemic while it embarked on a major restructuring.

The lender reported pre-tax profits of US$3.2 billion, down 48 percent from the same period last year, citing credit losses from clients struck by the economic slowdown as a major cause. 

"The economic impact of the Covid-19 pandemic on our customers has been the main driver of the change in our financial performance since the turn of the year," newly confirmed CEO Noel Quinn said in a statement. 

Reported expected credit losses in the first quarter of the year were US$3 billion – US$2.4 billion more than the first quarter of last year and its biggest bad loan bundle in almost nine years.

HSBC warned defaults would increase the longer the pandemic goes on, with the bank expecting between US$7 billion and US$11 billion in credit losses from clients this year.

The biggest risks were currently coming from the "oil and gas, transport and discretionary consumer sectors", the bank said.

But Quinn said it was facing down the global pandemic "from a position of strength" with "robust levels of capital, funding and liquidity".

Last month HSBC was one of a number of banks to cancel dividends and buybacks at the request of British regulators.

Before the lunchtime break, the bank's shares were up 1.77 percent in Hong Kong.

In its results statement HSBC said it plans to review its scrapped dividends policy towards the end of this year. (AFP)