There was an intriguing item in HSBC’s interim results highlights on August 1. The bank reported a total net expected credit losses (ECL) figure of $1.1 billion for the first half, made up of new charges and additional allowances “to reflect heightened economic uncertainty and inflation”; yet it also released most of its remaining Covid-19 reserves.
This raises an interesting question. At what point did credit stress stop being a pandemic issue and start being an unrelated macro issue?
One might argue that they are still one and the same.
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