HONG KONG/LONDON – HSBC Holdings on May 5 reported profit that missed estimates, weighed down by an unexpected UK fraud-related charge and rising economic risks stemming from the Iran war.
Pretax profit for the first three months of the year fell to US$9.4 billion (S$12 billion) versus US$9.5 billion a ago and missing the US$9.6 billion average estimate compiled by the bank. Those results were partially offset by a resilient performance within the lender’s International Wealth and Premier Banking and Hong Kong units.
The London-based bank booked US$1.3 billion in expected credit losses for the period. This figure was driven largely by a US$400 million charge linked to what the bank described as a “fraud-related, secondary, securitisation exposure with a financial sponsor in the UK”.
It also recorded a US$300 million increase in allowances tied to a deteriorating global economic outlook following the onset of hostilities in the Middle East.
“The group is well positioned to manage the changes and uncertainties prevalent within the global environment in which we operate, including in relation to the conflict in the Middle East,” HSBC said in its earnings statement.
Its shares tumbled as much as 4.25 per cent in early afternoon Hong Kong trading.
HSBC and Standard Chartered, which have both bet on increasing Middle East trade with Asia and beyond to fuel growth, are two of the global banks most exposed to the war, according to company data and sector analysts
While HSBC has not operated in Iran for more than a decade, the conflict’s broadening scope is threatening a region the bank had targeted for aggressive wealth and corporate banking expansion.
Rival StanChart last week booked a US$190 million credit charge due to cautious scenario planning, along with Lloyds Banking Group’s US$204 million and Deutsche Bank’s US$90 million provision in the same quarter.
HSBC revised its credit charge for 2026 to 45 basis points (bps) of average gross loans, from 40 bps, citing “ongoing uncertainty in the outlook”.
The bank did not identify the company involved in the fraud-related case, but said it has a total of US$3 billion in exposure to such securitisation financing, which it described as lending backed by portfolios of receivables such as mortgages, consumer loans and auto loans.
HSBC has been on a major restructuring drive for the past 18 months ever since Georges Elhedery took over as chief executive in September 2024. He has shut down, merged and sold several businesses in an effort to simplify the bank’s business and reduce costs. OCBC said late on May 4 that it is buying HSBC’s wealth and premium banking assets in Indonesia.
The transformation of HSBC had been welcomed by investors, with the shares hitting all-time highs in 2026. The outbreak of the US-Iran war caused the stock to plunge briefly before it pared most of those losses. BLOOMBERG, REUTERS
