HSBC, Standard Chartered and other bank results likely hit by bad loan provisions, analysts say
- Hong Kong’s biggest banks are likely to post larger bad loan reserves as coronavirus hits global economy, analysts say
- Biggest American banks announced US$25 billion in loss provisions as they prepare for deep downturn
Investors are bracing for potentially large loan loss provisions at HSBC, Standard Chartered and other big banks in Hong Kong as the coronavirus pandemic weighed heavily on economic activity around the world during the first quarter.
The city’s three currency-issuing lenders – HSBC, Standard Chartered and Bank of China (Hong Kong) – are all expected to report their first-quarter results this week beginning on Tuesday. Rivals DBS and Industrial and Commercial Bank of China (Asia) also are among lenders expected to update investors on their quarterly results this week.
“When banks reported their results for the end of December, none of them had factored in the real impact of Covid-19,” Paul McSheaffrey, a partner at accountancy firm KPMG, said. “We should definitely expect higher loan loss provisions coming through.”
When they reported their first-quarter results earlier this month, the biggest American banks, including Bank of America, Citigroup and JPMorgan Chase, set aside a collective US$25 billion for potential loan losses as they prepared to weather a global downturn not seen since the Great Depression. It was the biggest jump in loss provisions in a decade.
