Provide your email for confirmation

Tell us a bit about yourself

country *

Please provide your email address

welcome to Rappler

Login

To share your thoughts

Don't have an account?

Login with email

Check your inbox

We just sent a link to your inbox. Click the link to continue signing in. Can’t find it? Check your spam & junk mail.

Didn't get a link?

Use password?

Login with email

Reset password?

Please use the email you used to register and we will send you a link to reset your password

Check your inbox

We just sent a link to your inbox. Click the link to continue resetting your password. Can’t find it? Check your spam & junk mail.

Didn't get a link?

Sign up

Ready to get started

Already have an account?

Sign up with email

By signing up you agree to Rappler’s Terms and Conditions and Privacy

Check your inbox

We just sent a link to your inbox. Click the link to continue registering. Can’t find it? Check your spam & junk mail.

Didn't get a link?

Join Rappler+

Join Move

How often would you like to pay?

Annual Subscription

Monthly Subscription

Your payment was interrupted

Exiting the registration flow at this point will mean you will loose your progress

Your payment didn’t go through

Exiting the registration flow at this point will mean you will loose your progress

welcome to Rappler+

welcome to Move

welcome to Move & Rappler+

HSBC reports lighter-than-expected profit fall in Q3 2020

HSBC said on Tuesday, October 27, its 3rd quarter post-tax profits fell 46% on-year as the Asia-focused banking giant continued to take a hammering from the coronavirus pandemic and spiraling China-United States tensions.

However, the profit falls were not as bad as some analysts had predicted and HSBC said it expected credit losses to be at the lower end of a previously announced $8-billion to $13-billion range.

The global economic slowdown caused by the virus has hit financial giants hard and there is limited optimism on the horizon as Europe and the United States head into the winter with infections soaring once more. 

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

As a result, the lender is in the midst of a worldwide overhaul, aiming to slash some 35,000 jobs by 2022, primarily in its less profitable European and American divisions.

"We are accelerating the transformation of the Group, moving our focus from interest-rate sensitive business lines towards fee-generating businesses, and further reducing our operating costs," chief executive Noel Quinn said in a statement accompanying the results.

Reported post-tax profit for the 3rd quarter came in at $2 billion with revenue down 11% at $11.9 billion, the statement said.

Adjusted pre-tax profit slid 21% to $4.3 billion in the period, beating a $2.8-billion estimate by Bloomberg analysts.

Quinn described the latest figures as "promising results against a backdrop of the continuing impacts of COVID-19 on the global economy" as well as low interest rates. 

China and Brexit

In the first 6 months of 2020, HSBC's post-tax profits were down 69%, meaning the 3rd quarter results were something of an improvement as some major economies relaxed some of their coronavirus restrictions.

The bank said its board would consider whether to pay "a conservative dividend" for 2020 based on final end of year results and how the global economy looks in early 2021. 

Earlier this year, United Kingdom regulators called on British banks to scrap dividends for the year to preserve capital during the pandemic crisis.

HSBC makes 90% of its profit in Asia, with China and Hong Kong being the major drivers of growth.

As a result, it has found itself more vulnerable than most to the crossfire caused by the increasingly bellicose relationship between Beijing and Washington.

The bank has tried to stay in Beijing's good graces. 

It vocally backed a tough national security law that Beijing imposed on Hong Kong in June to end a year of unrest and pro-democracy protests.

The move sparked criticism in Washington and London, but analysts saw it as an attempt to protect its access to China, which has a track record of punishing businesses that do not toe Beijing's line.

"Geopolitical risk, particularly relating to trade and other tensions between the US and China, remains heightened," HSBC said in Tuesday's profit statement.

The US has sanctioned nearly a dozen key Hong Kong and Chinese officials over the national security law, telling international banks to stop doing business with them.

China's national security law, however, forbids businesses in Hong Kong from adhering to foreign sanctions regimes, leaving many in an unclear regulatory tight spot.

"Investor and business sentiment in some sectors in Hong Kong remains dampened and ongoing tensions could result in an increasingly fragmented trade and regulatory environment," HSBC said in its statement.

The bank also highlighted the uncertainty over Britain's withdrawal from the European Union (EU) as another potential headwind.

Talks for a post-Brexit trade deal have made little headway with a December 31 deadline fast approaching. 

"There is a risk of additional ECL (expected credit losses) charges, particularly in the UK in [the 4th quarter of 2020], if the UK and the EU fail to reach a trade agreement," the bank said. – Rappler.com