2020-08-25 08:30Financial Performance - Adjusted profit after tax for the first half of 2020 was $3.1 billion, down from $9.9 billion in the first half of 2019, representing a decline of 68.8%[10] - The reported net profit after tax for the first half of 2020 decreased by 69% to $3.1 billion, reflecting an increase in expected credit losses and a decrease in revenue[13] - The reported revenue for the first half of 2020 fell by 9% to $26.7 billion, impacted by declining interest rates and adverse market conditions affecting life insurance product business[13] - Adjusted pre-tax profit for the first half of 2020 was $5,635 million, down from $27,815 million in the first half of 2019, representing a decline of 79.8%[18] - The reported pre-tax profit for the first half of 2020 was $4.3 billion, a decrease of 65% compared to the same period in 2019[42] - The total operating income for the first half of 2020 was $31,147 million, down 18.2% from $38,032 million in the first half of 2019[141] - The company reported a significant decline in adjusted operating profit, which was $4.7 billion, down $6.3 billion or 57% from the previous year[63] - The company reported a significant impact from restructuring costs, totaling $49 million in the first half of 2020[195] Credit Losses and Provisions - The expected credit loss provisions increased by $5.7 billion to $6.9 billion due to the COVID-19 pandemic and deteriorating economic outlook[15] - Total expected credit losses for the first half of 2020 amounted to $6.9 billion, significantly higher than $1.1 billion in the same period of 2019[44] - The expected credit losses and other credit impairment charges increased to $6,858 million for the first half of 2020, compared to $1,140 million in the same period of 2019[141] - The expected credit loss ratio for retail business was 1.08%, exceeding the target of 0.50%[117] - The company anticipates expected credit loss provisions could range from $8 billion to $13 billion for 2020, reflecting significant uncertainty due to the ongoing impact of the COVID-19 pandemic[148] Revenue and Income Trends - The reported revenue for Q2 2020 was $13.1 billion, a decrease of $1.9 billion or 13% compared to Q2 2019, influenced by the non-recurrence of prior year gains[59] - Adjusted revenue for the first half of 2020 was $26.5 billion, a decrease of $1.3 billion or 5% compared to the first half of 2019, impacted by declines in wealth management and personal banking, as well as commercial banking[65] - The company experienced a significant decrease in revenue compared to the same period in 2019, with a decline of approximately 10%[170] - The company reported a significant increase in credit pressure due to the unprecedented global economic slowdown caused by the COVID-19 pandemic, leading to enhanced monitoring activities at the group level[135] Customer Support and Assistance - HSBC provided over $27 billion in loan, credit card, and mortgage payment deferral arrangements for individual customers during the pandemic[11] - The company approved over 700,000 personal customer repayment deferrals in the first half of 2020[26] - HSBC provided over $52 billion in financial support to more than 172,000 wholesale customers during the first half of 2020[21] - The company has implemented measures such as mortgage support, repayment deferrals, and fee waivers to assist customers during the COVID-19 pandemic[126] Operational Adjustments and Cost Management - The company plans to accelerate its transformation initiatives and implement additional cost control measures to mitigate revenue pressures[16] - The cost-to-income ratio increased to 61.8% in the first half of 2020, compared to 58.4% in the same period of 2019[18] - The company implemented cost-saving measures that reduced operating expenses by 4%[23] - The company is focusing on restructuring and cost management strategies to improve profitability moving forward[170] Digital Transformation and Technology Investment - The bank launched a new digital banking service application, HSBC Kinetic, for small and medium-sized enterprises in the UK[11] - The company invested $2.8 billion in technology development in the first half of 2020[23] - HSBC's digital service capabilities were enhanced to provide remote services to more customers, ensuring a seamless banking experience during the pandemic[20] - The company is investing in advanced analytics and artificial intelligence technologies to improve financial crime prevention tools, particularly during the crisis when fraudulent activities tend to increase[135] Market and Economic Outlook - The ongoing geopolitical risks, particularly between the US and China, are expected to have economic impacts on the group[9] - The outlook remains highly uncertain, depending on the path and speed of economic recovery[12] - The financial impact of the COVID-19 pandemic has led to significant declines in local GDP across multiple markets[126] - The company is closely monitoring capital adequacy and liquidity in response to emerging geopolitical and economic risks[122] Asset and Capital Management - The common equity tier 1 capital ratio increased by 30 basis points to 15% due to an increase in common equity capital[17] - The total assets as of June 30, 2020, were $2,922,798 million, up from $2,751,273 million a year earlier, reflecting a growth of 6.2%[18] - The liquidity coverage ratio stood at 148% as of June 30, 2020[126] - The company reduced its total risk-weighted assets by $21 billion in the first half of 2020[104] Employee and Community Engagement - The company launched a global multi-ethnic inclusion program in May 2020 to enhance support for employees from diverse ethnic backgrounds[33] - The bank is committed to improving the representation of Black talent in senior positions through targeted development interventions[33] - The company has committed over $20 million to various programs supporting vulnerable communities during the pandemic[38] Regional Performance - The company’s Asian business accounted for over 170% of the group’s profit before tax, highlighting its importance to the overall performance[48] - The revenue from the UK market was $6.329 billion, while Hong Kong contributed $9.075 billion, indicating strong regional performance[196]