Net profit of HSBC plunged 96% in Q2 due to low-interest rates, Covid-19
Europe’s biggest bank, HSBC, said Monday that its net profit plunged 96 per cent in the second quarter of this year as lower interest rates combined with the downturn due to the coronavirus pandemic tool hold.
The bank’s net profit was USD 192 million in the April-June quarter. It was USD 4.37 billion reported in the same period the previous year. Net profit of HSBC in the first quarter of the year was USD 1.79 billion. The London-based HSBC has major business in Asia, where the pandemic starts.
Near-zero interest rates meant to help businesses keep running with cheap credit are squeezing margins for lenders. The bank forecasts expected credit losses of USD 8 billion-USD 13 billion in 2020, though it said that was subject to a high degree of uncertainty.”
According to HSBC “it’s lending in the last quarter fell 3 per cent to USD 29 billion while deposits rose 6 per cent to USD 85 billion as customers saved more and spent less. Revenue slipped 12 per cent to USD 5.6 billion thanks to slimmer interest rate margins and weaker wealth management activity”.
One area of growth was mobile payments, which jumped more than doubled from a year earlier to USD 71.4 billion. Earlier this year, the bank said it will shed some 35,000 jobs as part of an overhaul to focus on faster-growing markets in Asia and as it tries to cope with a slew of global uncertainties, from Brexit to the trade wars to the pandemic.
HSBC paused its restructuring efforts in the last quarter to focus on supporting its customers said the bank’s chief executive, Noel Quinn, in a presentation posted online
The net profit of HSBC fell 53 per cent to USD 6 billion in 2019.