HSBC, Standard Chartered results likely to be hit by loan loss provisions once again, analysts say
- Standard Chartered is first of city’s currency-issuing banks to report results on Thursday
- Analysts expect HSBC and Standard Chartered to report a combined US$3.4 billion in loan loss provisions for the second quarter
Investors are preparing for another round of large loan loss provisions at HSBC, Standard Chartered and other big banks in Hong Kong, after additional waves of the coronavirus pandemic weighed on economic activity globally in the second quarter.
Analysts expect HSBC and Standard Chartered to report a combined US$3.4 billion in loan loss provisions for the second quarter, but that is likely to be less of a hit to their profits than at some of their rivals in the United States and Europe.
“Whereas in Europe, the economic forecasts have been deteriorating, in Asia they’ve been picking up, particularly in China,” said Fahed Kunwar, an equity analyst at stock brokerage Redburn (Europe). “It all depends on the second wave. As it stands right now, the Asian banks have a clearer line of sight on loan provisions than vis-à-vis the European banks.”
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Despite both being based in London, HSBC and Standard Chartered each count Hong Kong as their biggest market and generate the bulk of their profit in Asia.
