Cryptocurrency NewsTop News

HSBC Warns Credit Losses to Rise Despite BOE Virus Leeway

imageStock Markets11 hours ago (Mar 26, 2020 07:45AM ET)

(C) Bloomberg. An aeroplane approaches city airport passing the offices of HSBC Holdings Plc in the Canary Wharf business, financial and shopping district in London, U.K., on Thursday, June 5, 2018. The owners of a Canary Wharf skyscraper leased to Citigroup Inc. are seeking to refinance the 661 million-pound ($882 million) loan used to buy it five years ago, two people with knowledge of the plan said. Photographer: Chris Ratcliffe/Bloomberg

(Bloomberg) —

HSBC Holdings Plc (LON:HSBA) warned it still expects to book higher credit losses on the back of the pandemic even after the Bank of England gave lenders leeway to deal with unpaid loans.

In an update to investors contained in the prospectus for its latest debt sale, HSBC said it would have to take into account the impact of virus on economies, when it measures potential losses in its upcoming financial results. The lender, which generates most of its revenue in Asia, added the economic disruption caused by the virus could have “adverse impacts” on the value of its assets, including its holding in China’s Bank of Communications Co Ltd.

The disclosure was made in a U.S. filing on Wednesday. Last week, the Bank of England said financial institutions should be flexible when applying the accounting rules, as part of a package of measures, which included canceling its annual banking industry stress tests.

“An immediate impact in early 2020 will be higher expected credit losses driven by a change in the economic scenarios used to calculate ECL,” said the bank. HSBC cited the new IFRS9 accounting standard, which requires banks to forecast their outlook for gross domestic product.

Europe’s largest lender said the actions taken by central banks and governments across the world to dampen the impact of the outbreak could lead to restrictions on the movement of capital. “These may limit management’s flexibility in managing the business and taking action in relation to capital distribution and capital allocation,” according to the bank.

Barclays (LON:BARC) Plc has already said the pandemic is likely to mean the bank will miss its profitability target. Speaking at a virtual conference last week, Barclays’ Chief Financial Officer Tushar Morzaria said it would be a “tough year for earnings.”

(C)2020 Bloomberg L.P.

HSBC Warns Credit Losses to Rise Despite BOE Virus Leeway

Disclaimer: Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. All CFDs (stocks, indexes, futures) and Forex prices are not provided by exchanges but rather by market makers, and so prices may not be accurate and may differ from the actual market price, meaning prices are indicative and not appropriate for trading purposes. Therefore Fusion Media doesn`t bear any responsibility for any trading losses you might incur as a result of using this data.

Fusion Media or anyone involved with Fusion Media will not accept any liability for loss or damage as a result of reliance on the information including data, quotes, charts and buy/sell signals contained within this website. Please be fully informed regarding the risks and costs associated with trading the financial markets, it is one of the riskiest investment forms possible.

Related Articles

Back to top button
Get the daily email that makes reading the news actually enjoyable. Stay informed and entertained, for free.
Your information is secure and your privacy is protected. By opting in you agree to receive emails from us. Remember that you can opt-out any time, we hate spam too!