HSBC’s profits fall as credit losses double to £1.9billion

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The banking giant said that its revenues for the quarter were down three per cent to £10.1billion and that during that three-month period, its expected credit losses had doubled to £1.9billion.

HSBC blamed its woes on higher inflation, interest rates and geopolitical instability hitting the global economy, as well as a £2.1billion accounting loss due to the sale of its French retail bank. It also needed to set aside more money to cover rising bad debts and China’s property market crash.

Noel Quinn, chief executive, warned that HSBC’s credit losses are likely to be higher next year and that its net interest income for 2023 will be £870million lower than forecast at £31.4billion following the devaluation of Sterling and higher funding costs.

Despite this, Quinn insisted that HSBC had delivered “a good set of results” and pointed out that it had cut its costs.

He said: “Our strategy produced good organic growth in all three global businesses and net interest income increased on the back of rising interest rates.”

“We retained a tight grip on costs, despite inflationary pressures and remain on track to achieve our cost targets for 2022 and 2023.”

HSBC has announced the surprise departure of chief financial officer Ewen Stevenson.

He will be replaced by its former investment banking chief Georges Elhedery on January 1. The 48-year-old is now in pole position to succeed Quinn, who is 61.

Analyst Sophie Lund-Yates, of Hargreaves Lansdown, said that Elhedery will have a difficult task navigating the bank through the worsening economic environment.

She said: “The Newton’s cradle of events triggered by higher rates first start with prosperity in the form of fatter interest income, but the final sphere kicked out by that very momentum is looking like it will be recession.”

“He will know only too well the mixed bag and delicately spinning plates he’s being handed.”

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