Whilst Coronavirus might be providing a boost for trading providers, the same can’t be said for all companies within the financial space, with HSBC, in particular, reporting a hit during the first quarter of 2020 this Tuesday.
The coronavirus pandemic has weighed heavily on HSBC, contributing to the London-headquartered bank posting profit before tax of $3.2 billion, which represents a drop of 48 per cent.
According to the report, PBT was dragged down by higher expected credit losses, lower revenue and credit impairment charges. In particular, the bank attributed the fall in PBT to the global impact of the COVID-19 outbreak and weakening oil prices.
Revenue for the first quarter also fell by 5 per cent, on the back of adverse market impacts in life insurance manufacturing and adverse valuation adjustments in Global Banking and Market. However, the bank did see a resilient performance in Asia, Global Markets, Retail Banking and Global Private Banking.
HSBC pauses redundancies amid COVID-19
Commenting on the results, Noel Quinn, Group Chief Executive, said in the statement: “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. The resultant increase in expected credit losses in the first quarter contributed to a material fall in reported profit before tax compared with the same period last year...
“I take the well-being of our people extremely seriously. We have therefore paused the vast majority of redundancies related to the transformation we announced in February to reduce the uncertainty they are facing at this difficult time. We continue to press forward with the other areas of our transformation with the aim of delivering a stronger and leaner business that is better equipped to help our customers prosper in the recovery still to come.”
2020 outlook for world economies significantly worsens
As pointed out by the bank, the outlook for world economies in 2020 has substantially worsened following the outbreak of coronavirus. Because of this, HSBC expects this to put pressure on revenue as a result of lower customer activity levels and reduce global interest rates. HSBC also expects materially lower profitability in 2020 in comparison to 2019.
