SINGAPORE (April 28): HSBC Holdings reported a 48% y-o-y decline in profit before tax to US$3.2 billion from higher expected credit losses (ECL), other credit impairment charges and lower revenue. The reduction primarily reflected the global impact of the Covid-19 outbreak and weakening oil prices, the banking behemoth said. Profit after tax was down 49% y-o-y to US$2.5 billion.
Reported ECL increased by US$2.4 billion to US$3.0 billion due to the impact of Covid-19 and weakening oil prices on the forward economic outlook and a significant charge related to a corporate exposure in Singapore. HSBC’s exposure to Hin Leong Trading, which is under court protection, is US$600 million. Allowance for ECL increased from US$9.2bn at Dec 31 2019 to US$11.1 billion at Mar 31 2020.
As a result, credit costs for the quarter to Mar 31 2020 rose to 118 basis points from 28 bps in the quarter to Dec 31, 2019, and from 24 bps in 1QFY2019.