US-China rivalry hinders a struggling HSBC
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BANKING

US-China rivalry hinders a struggling HSBC

Analysts hope HSBC will announce a more radical strategy shift when the bank posts half-year results on Monday. Executives at a bank caught between an irascible Chinese public and quarrelsome US politicians, might simply wish for better days ahead.

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HSBC has suffered an absolutely torrid few months. As it gears up to announce what are likely to be a rocky set of interim results at 5am London time (12 noon Hong Kong) on Monday August 3, it’s worth pausing to sum up the level of the trouble it’s in – and why its future is not all bleak.

HSBC’s problems come in three forms: financial, structural and reputational.

Let’s start with the first of them. Covid will hit and hurt all banks, be it now or later. On July 29, Barclays booked a pre-tax profit of £1.3 billion ($1.7 billion) for the first half of the year, against £3 billion a year ago.

The £3.7 billion in provisions it set aside in the first half to cover bad loans, should rise to £5.79 billion for the full year.

HSBC’s problems are no less stark.

Ronit Ghose, global head of banks research at Citi, tips HSBC to post a 7% year-on-year fall in second-quarter net interest income on Monday, August 3, with pre-tax profit declining 32% year on year to $4.2 billion.


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