HSBC profits slump 90% in first six months

HSBC posted a pre-tax profit of €1.8 million in the first six months as the bank took a hit like the rest of the economy from the COVID-19 crisis

HSBC saw its profits cut by 90% in the first six months
HSBC saw its profits cut by 90% in the first six months

HSBC profits slumped by 90% in the first six months as the bank posted a pre-tax profit of €1.8 million.

The bank’s performance was effected by the COVID-19 pandemic, in line with the rest of the economy.

The bank said that it experienced higher than expected credit losses and lower revenue that led to a reduction in pre-tax profits of €19.1 million.

Simon Vaughan Johnson, director and CEO of HSBC Malta, said this has been one of the most demanding periods for the bank. HSBC will not be declaring an interim dividend.

Johnson said the loss was predominately driven by revaluation losses as a result of adverse market movements and lower trading activities.

The bank’s insurance business also took a hit, with net income from assets and liabilities reduced by €65 million to a €30 million loss.

HSBC reported that costs were 5% less, compared to the same period in 2019 reflecting strong progress on the cost-cutting strategy announced last year.

Interestingly, deposits rose by €168 million, or 3%, in line with what the Central Bank of Malta had reported.

Customer accounts were €5.1 billion as at 30 June, 3% higher than at the end of December, and these were driven by retail deposits.

HSBC said its liquidity ratios were well in excess of regulatory requirements. 

Johnson said the bank’s financial performance “inevitably suffered in line with the rest of the economy” while at the same time, the bank succeeded in supporting its customers during the crisis.

Johnson said the bank will strive to achieve revenue growth as market conditions improve, whilst maintaining a strong risk management culture. He insisted the bank had “zero appetite for financial crime risk”.