HSBC profits plunge on Ukraine war and inflation worries

The lending giant posted a 28% drop in pre-tax profits to 4.2 billion US dollars (£3.3 billion) for the first three months of the year.
Banking giant HSBC has seen first-quarter profits tumble by more than a quarter after taking a hit on expected bad debts due to the Ukraine war and soaring inflation (Tim Ireland/PA)
PA Archive
Holly Williams26 April 2022

Banking giant HSBC has seen first-quarter profits tumble by more than a quarter after taking a hit on expected bad debts due to the Ukraine war and soaring inflation.

The lender posted a 28% drop in pre-tax profits to 4.2 billion US dollars (£3.3 billion) for the first three months of 2022, largely due to a 642 million US dollar (£504 million) charge set aside for loan losses as it warned over the economic impact of Russia’s invasion of Ukraine.

It said a slowdown in China’s property market was also behind the bad debt impact, which sees a return to credit impairments after HSBC and rivals spent the past year releasing cash set aside for Covid loan losses. HSBC had released 400 million US dollars (£314 million) a year ago.

Group chief executive Noel Quinn said: “The Russia-Ukraine war continues to have devastating consequences both within Ukraine and beyond.”

He added: “HSBC Russia is not accepting new business or customers and is consequently on a declining trend.

“The vast majority of our business in Russia serves multinational corporate clients headquartered in other countries, and, as a global bank, HSBC has a responsibility to help them manage these challenging circumstances.”

The group’s figures come after its US counterparts recently set the tone with a slew of loan loss provisions.

But quarterly results also out on Tuesday from Spanish rival Santander showed it bucked the trend thanks to rising interest rates boosting its retail operations, with UK underlying first quarter profits surging to £495 million from £175 million a year ago.

HSBC’s profits were also better than expected as it benefited from higher lending across its global operations, although revenues came in short of forecasts – down 4% at 12.5 billion US dollars (£9.8 billion).

The group warned over the inflationary pressures caused by the Ukraine war, which it said has cast uncertainty over the economic outlook.

It also saw its wealth management business knocked by strict Covid restrictions in Hong Kong – its largest market – due to a surge of cases, which further knocked profits in the quarter.

Create a FREE account to continue reading

eros

Registration is a free and easy way to support our journalism.

Join our community where you can: comment on stories; sign up to newsletters; enter competitions and access content on our app.

Your email address

Must be at least 6 characters, include an upper and lower case character and a number

You must be at least 18 years old to create an account

* Required fields

Already have an account? SIGN IN

By clicking Create Account you confirm that your data has been entered correctly and you have read and agree to our Terms of use , Cookie policy and Privacy policy .

This site is protected by reCAPTCHA and the Google Privacy Policy and Terms of Service apply.

Thank you for registering

Please refresh the page or navigate to another page on the site to be automatically logged in