HSBC has suffered an absolutely torrid few months. As it gears up to announce what are likely to be a rocky set of interim results at 5am London time (12 noon Hong Kong) on Monday August 3, it’s worth pausing to sum up the level of the trouble it’s in – and why its future is not all bleak.
HSBC’s problems come in three forms: financial, structural and reputational.
Let’s start with the first of them. Covid will hit and hurt all banks, be it now or later. On July 29, Barclays booked a pre-tax profit of £1.3 billion ($1.7 billion) for the first half of the year, against £3 billion a year ago.
The £3.7 billion in provisions it set aside in the first half to cover bad loans, should rise to £5.79 billion for the full year.
HSBC’s problems are no less stark.
Ronit Ghose, global head of banks research at Citi, tips HSBC to post a 7% year-on-year fall in second-quarter net interest income on Monday, August 3, with pre-tax profit declining 32% year on year to $4.2 billion.
It would not be a shock to see them announce a downsizing of their US retail operations on Monday – and perhaps a downsizing or sale of operations in other markets -Ronit Ghose, Citi
He points the finger at emergency rate cuts announced in March by the Federal Reserve and the Bank of England, and warns of “more to follow” in the third quarter.
