HSBC Bank issued a warning that the global trade war triggered by US President Trump would cause broader impacts, especially directly affecting loan and credit quality, which means that HSBC Bank, primarily serving commercial customers, will face more challenging times.
HSBC Bank (HSBC Holdings), Europe's largest bank, has reset its targets and announced a new $3 billion share buyback plan. Its first-quarter financial report disclosed a pre-tax profit of $9.5 billion, mainly due to one-time fees related to the disposal of Canadian and Argentine businesses. Analysts had previously estimated the pre-tax profit of this European bank with the largest assets would be $7.8 billion, and the bank's first-quarter profit exceeded analysts' expectations. On April 29, HSBC's Hong Kong stock price rose by about 3.2%, the Hang Seng Index remained flat, and the London Stock Exchange price rose by about 2.1%. Despite excellent financial reports and stock performance, HSBC's CEO made a pessimistic prediction about future market volatility.
Table of Contents
ToggleHSBC indicates that if the economy slows down, loan demand will be suppressed
HSBC Bank is one of the world's largest trade finance banks, and they have publicly issued the most clear warning to the public after tariff policies. The global chain reaction caused by Trump's tariff policies may suppress loan demand and trigger market sentiment, damaging the interests of lending institutions.
HSBC CEO Georges Elhedery told reporters in a telephone conference that the bank studied all revenue sources and credit portfolios to assess the various impacts of tariffs. The analysis results showed a low impact on bank revenues, but a far-reaching impact on credit. If the economy slows down, an additional loss of about $500 million is expected. The currently disclosed bank report shows that the expected credit losses for this quarter are $900 million, of which $150 million reflects the uncertainty of the future economy.
Georges Elhedery stated that commercial customers in the United States and China were particularly severely affected. HSBC found that trade volume in the US-China trade corridor has significantly decreased in areas without tariff exemptions or reductions. If the economy slows down, HSBC Bank may additionally provide for $500 million in credit losses.
Goldman Sachs CEO expects market to be full of emotional volatility
HSBC is not the only financial institution feeling uneasy about Trump's tariff policies. Since the tariff policy news was announced at the beginning of this month, Goldman Sachs (Goldman Sachs NYSE symbol GS.N) stock has fallen by about 12%. Goldman Sachs CEO David Solomon said that the continued uncertainty of tariff policies and market volatility have prompted clients to rethink investment allocations, with trading activity increasing dramatically. This change highlights the emotional performance of the industry facing tariffs, and the financial market environment is clearly different from before. Just a few months ago, the banking industry was celebrating Trump's return to the White House.
Top executives of major US banks have stated in recent financial report conferences that the economy will be turbulent after Trump announced large-scale tariff sanctions on April 2. HSBC Bank fired the first shot, directly warning that Trump's US-China trade war might disrupt global financial markets and raise concerns about sharp economic downturns in various regions.
Risk Reminder
Cryptocurrency investment carries high risks, and its price may fluctuate dramatically. You may lose all your principal. Please carefully assess the risks.
