HSBC’s profits for the first half of this year have plunged 65% as it battles the coronavirus downturn.
The UK’s biggest bank posted pre-tax profits of $4.3bn (£3.3bn), compared to $12.4bn for the same period last year.
The fall was much larger than analysts had forecast as HSBC was hit by loans turning bad and interest rates remaining low.
While HSBC is headquartered in London, more than half of its profits come from the Asian financial hub of Hong Kong.
HSBC said it has set aside $8bn to $13bn this year for bad loans as it expects more people and businesses to default on their repayments.
This is higher than previously budgeted for, taking into account the effects of the economic downturn.
The bank said it has given more than 700,000 payment holidays on loans, credit cards and mortgages, providing more than $27bn in customer relief.
HSBC has also been hit by the low interest rate environment, which squeeze a bank’s profit margins on the loans it provides. The lower the interest rate, the less a bank makes on its lending.Political tensions
The bank is dealing with a number of challenges, not just the financial downturn caused by the coronavirus.
It is currently embroiled in a political battle over its support of China’s national security law in Hong Kong while pushing ahead with a major restructuring of its global banking operations.
“We will face any political challenges that arise with a focus on the long-term needs of our customers and the best interests of our investors,” HSBC’s group chief chief executive Noel Quinn said on Monday.
“Current tensions between China and the US inevitably create challenging situations for an organisation with HSBC’s footprint. However, the need for a bank capable of bridging the economies of east and west is acute, and we are well placed to fulfil this role.”Job cuts
In June, the UK’s largest bank, said it will push ahead with its plan to cut 35,000 jobs from a global workforce of 235,000 as part of a major restructuring announced in February.
HSBC chairman Mark Tucker is overseeing the programme to shrink the bank’s operations in Europe and the US.