Covid-19 impact: HSBC warns loan losses may reach $13 billion this year

HSBC Holdings is speeding up the shakeup of its global business and warning loan losses may reach $13 billion this year as it battles the economic fallout from the coronavirus pandemic.

The Asia-focused lender reported first-half profit that missed estimates after they more than halved to $5.6 billion because of higher loan losses. The bank said it was looking at further measures to boost performance, including investing more in Asia and cutting back in the US.

“We do need to take costs down, as a result of the revenue pressures” from the coronavirus, said Chief Financial Officer Ewen Stevenson in an interview with Bloomberg Television after HSBC lifted its estimated bad debt charge to the range of $8 billion to $13 billion for the year. The shares were down 4.2 per cent at 9 am in London.

HSBC has been seeking to pivot away from Europe and the US to expand its business in the fast-growing Chinese market. 

The lender, which has been singled out by Washington for its backing of Beijing, said it will continue to shift its capital towards Asia, which provided nearly all of its earnings.