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HSBC has increased its provisions for bad loans, citing a deteriorating economic outlook from higher tariffs and geopolitical tensions.
The UK-based lender raised its expected credit losses by $202mn to $876mn in the first quarter of 2025, slightly higher than analyst estimates. The year-on-year increase included $100mn specifically for its exposure to Hong Kong’s commercial property sector.
Pre-tax profits fell 25 per cent to $9.5bn in the first three months of the year, beating analyst expectations of $9.1bn compiled by Bloomberg. They were down from $12.7bn a year earlier when it recorded net one-off gains related to the sales of its units in Canada and Argentina.
Net interest income for the lender fell to $8.3bn from $8.7bn a year ago, reflecting lower market rates and reinforcing the need for the bank to focus on growing non-rate-sensitive revenue streams.
Since becoming group chief executive last September, Georges Elhedery has embarked on a significant cost-cutting plan that involves $300mn of cost savings in 2025 and a total $1.5bn from its annual cost base by the end of 2026.
The savings are part of a larger restructuring, including reorganising operations into “eastern” and “western” sections that it swiftly renamed, closing parts of its investment banking business and axing a middle layer of bankers.
The group on Tuesday announced a share buyback of up to $3bn that would begin after its annual meeting on May 2. It declared an interim dividend of $0.10 a share.
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