HSBC Profit Slumps 65% In 2020 First Half, As COVID-19 Pandemic, US-China Tensions Take Toll

HSBC Holdings plc HSBC missed analyst expectations in the financial results for the first half of this financial year.

H1 Earnings: The bank posted a profit before tax of $4.3 billion on Monday, a 65% decline year-over-year. It said the performance in the first half of 2020 was affected by the COVID-19 pandemic, falling interest rates, increased geopolitical risk, and heightened levels of market volatility.

HSBC analysts had estimated the bank to post a 24.4% higher profit before tax at $5.69 billion, CNBC reported earlier.

The lender said revenue declined 9% to $26.7 billion in H1, while operating expenses fell 4% year-on-year to $16.53 billion. 

HSBC reported credit impairment rose to $6.9 billion in the same period due to the impact of the pandemic and a non-favorable economic outlook.

US-China Rift Takes A Toll: The London-based financial giant's CEO Noel Quinn acknowledged that "current tensions" between China and the United States "create challenging situations" for HSBC, which has a key market in Asia, especially Hong Kong.

The bank courted a controversy when it publicly backed a controversial national security law imposed by Beijing on Hong Kong earlier in June.

In February, HSBC announced plans to cut 35,000 jobs and cancel share buybacks as a part of a restructuring plan and pledged to undertake a group-wide simplification.

What Else: On Thursday, fellow British bank Standard Chartered PLC SCBFF reported a 33% fall in H1 2020 profits to $1.6 billion.

Price Action: HSBC shares closed nearly 0.5% lower at $22.65 in New York on Friday.

Photo credit: HSBC Holdings plc