HSBC Holdings plc, the UK-based multinational bank, has released its financial figures for the first quarter of this year, showing profit after tax down $1.1 billion (€1.03 billion) year-on-year, to hit $3.4 billion (€3.19 billion).
Profit before tax decreased even further, falling $1.6 billion (€1.5 billion) to hit $4.2 billion (€3.94 billion).
The bank attributed this performance to higher-than-expected credit losses and inflation, as well as the “devastating consequences” of Russia’s invasion of Ukraine.
It put aside $250 million (€235 million) in provisions to account for potential losses linked to its direct exposure to Russia, in line with a wider banking trend as banks begin to increase the amount of money they hold in reserve amidst fears customers will fall behind on payments because of the cost of living crisis.
However, this figure is relatively small compared to the $3 billion (€2.82 bullion) that Ewan Stevenson, HSBC’s chief financial officer, stated would likely need to be put aside for potential defaults throughout this year.
With regards to Russia, HSBC has refused to shut down its operations in the country, despite pressure to do, instead choosing to not accept new business or clients there.
“The vast majority of our business in Russia serves multinational corporate clients headquartered in other countries, and as a global bank, HSBC has a responsibility to help them manage these challenging circumstances,” it claimed.
Providing an outlook for the future, the bank said its revenue outlook remains positive, with growth in net interest income expected to continue. This, HSBC expanded, is expected to be supported by mid-single-digit percentage lending growth for 2022.
The bank is also on track to deliver 2022 adjusted operating expenses in line with 2021, despite inflationary pressures, and it expects over $2 billion (€1.88 billion) of cost savings to be delivered during 2022 with associated costs to achieve spend of $3.4 billion (€3.19 billion).
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