HSBC Holdings PLC's first-quarter profit nearly halved from a year-ago, missing estimates, after boosting provisions against bad loans as the coronavirus pandemic hits borrowers worldwide.
Europe's biggest bank by assets said profit before tax came in at $3.21 billion for January-March, down from $6.21 billion a year ago and below an average analyst forecast of $3.67 billion compiled by the bank.
The bank increased its expected credit impairment charges by a hefty $2.4 billion to $3 billion due to the impact of COVID-19 and weakening oil prices as well as "a significant charge related to a corporate exposure in Singapore", it said.
HSBC warned the impact of the pandemic on the global economy would mean a rise in bad loans, and sustained pressure on its revenues as customer activity declined and lower central bank interest rates squeezed margins.
It also said a rise in fraudulent activity could lead to "potentially significant" credit losses.
The London-headquartered bank said it plans to reduce its operating costs to try and mitigate the fall in revenue, leading to "materially lower" profitability in 2020 than last year.
HSBC said last week it is pressing ahead with plans outlined in February to shift capital from underperforming businesses, reduce costs and strip out layers of management. But it has paused job cuts to avoid disruption and leaving staff unable to find work elsewhere.
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