HSBC on Tuesday reported a 28% fall in first-quarter profits due to higher-than-expected credit losses, the Ukraine war and a slowdown in China.
The bank posted pre-tax profits of $4.2bn for the three months to March, still better than expectations of $3.7bn, with revenue down 4% to $12.5bn.
Earnings were also hit by surging Covid-19 cases in Hong Kong, HSBC’s largest market, which led to reduced share trading, bank branch closures and a slowdown at its China wealth management division.
“The Russia-Ukraine war continues to have devastating consequences both within Ukraine and beyond,” said chief executive Noel Quinn, noting that conflict had “exacerbated inflationary pressures, and increased uncertainty on the forward economic outlook”.
“HSBC Russia is not accepting new business or customers and is consequently on a declining trend.”
The bank said its revenue outlook “remains positive”, with growth in net interest income expected to continue as implied market consensus policy rate movements have improved since its 2021 results.
“This is expected to be supported by mid-single-digit percentage lending growth for 2022,” it added.
“While Covid-19-related restrictions in Hong Kong resulted in a comparatively muted first quarter for our wealth business, we expect a recovery when restrictions are lifted.”
