Noel Quinn, Group Chief Executive, said:
“Our first half performance was impacted by the Covid-19 pandemic, falling interest rates, increased geopolitical risk and heightened
levels of market volatility. Despite this, our Asia franchise showed resilience, and our Global Markets business delivered strong growth
compared with last year’s first half. Having paused parts of our transformation programme in response to the Covid-19 outbreak, we now
intend to accelerate implementation of the plans we announced in February. We are also looking at what additional actions we need to
take in light of the new economic environment to make HSBC a stronger and more sustainable business.”
“Current tensions between China and the US inevitably create challenging situations for an organisation with HSBC’s footprint. We will
face any political challenges that arise with a focus on the long-term needs of our customers and the best interests of our investors.”
Financial performance (vs 1H19)
• Reported profit after tax down 69% to $3.1bn and reported profit before tax down 65% to $4.3bn from higher expected
credit losses and other credit impairment charges (‘ECL’) and lower revenue. Reported profit in 1H20 also included a $1.2bn
impairment of software intangibles, mainly in Europe.
• In Asia, we reported profit before tax of $7.4bn in 1H20, despite higher ECL, demonstrating the strength and continued
resilience of our operations in the region and underlining the importance of Asia to the Group. Higher ECL charges
materially impacted profitability in our markets across the rest of the world, notably in our operations throughout Europe.
• Reported revenue down 9% to $26.7bn, reflecting the impact of interest rate reductions, as well as adverse market impacts in life
insurance manufacturing and adverse valuation adjustments in Global Banking and Markets (‘GBM’), notably in 1Q20. These factors
more than offset higher revenue in Global Markets.
• Net interest margin (‘NIM’) of 1.43% in 1H20, down 18 basis points (‘bps’) from 1H19. NIM in 2Q20 was 1.33%, down
21bps from 1Q20, primarily reflecting the initial impact of the reduction in interest rates due to the Covid-19 outbreak.
• Reported ECL increased by $5.7bn to $6.9bn due to the impact of the Covid-19 outbreak and the forward economic outlook, and
due to an increase in charges related to specific wholesale customers. ECL (annualised) as a percentage of average gross loans and
advances to customers was 1.33% in 1H20, while allowance for ECL against loans and advances to customers increased from $8.7bn
at 31 December 2019 to $13.2bn at 30 June 2020.
• Reported operating expenses down 4%, despite a $1.2bn impairment of software intangibles. Adjusted operating expenses
fell 5%, despite continued investment, due to lower performance-related pay and reduced discretionary costs.
• In 1H20, lending decreased by $18bn on a reported basis. On a constant currency basis, lending increased by $12bn,
reflecting corporate customers drawing on existing and new credit lines and re-depositing these to increase cash balances in 1Q20,
which was partly offset by paydowns in 2Q20. Deposits grew by $93bn on a reported basis and $133bn on a constant
currency basis, with growth in all global businesses, including through the depositing of loans from government-backed schemes.
• Common equity tier 1 capital (‘CET1’) ratio of 15.0%, up 30bps from 4Q19, as higher CET1 capital, which included an
increase from the cancellation of the 4Q19 dividend and the current suspension of dividends on ordinary shares, more than offset the
impact of risk-weighted asset (‘RWA’) growth.
Downloadable item here;
https://www.hsbc.com/investors/results- ... ouncements
There is mention further down regarding dividends, and that they would be reported on further at the full year results stage.