The Wealth and Personal Banking (WPB) of HSBC has posted a 65% slump in pre-tax profit in H1 2020 due to rise in adjusted ECL and lower adjusted revenue.
WPB was created through the consolidation of the bank’s retail banking, wealth management, and global private banking units.
Key WPB metrics
Adjusted profit before tax at WPB in the first six months of 2020 stood at $1.69bn, compared with last year’s figure of $3.99bn.
The unit’s half-yearly net operating income of $11.25bn was 13% lower than the previous year.
In Wealth Management, revenue declined 20% to $3.61bn.
Reduced performance related pay accrual and discretionary expenses resulted in a 3% decrease in WPB’s adjusted operating expenses to $7.35bn from $7.55bn. This offset the impact of digital and wealth investments.
Global Private Banking revenue remained flat at $921m. This occurred as lower interest rates on deposit revenue offset higher investment revenue due to volatile market conditions and a rise in fees from advisory and discretionary mandates.
Investment distribution revenue dipped 6% on a year-on-year basis, driven by Hong Kong’s adverse market conditions leading to reduced mutual fund sales.
Covid-19 dents HSBC performance in H1 2020
At a group level, HSBC’s reported pre-tax profit plunged 65% to $4.32bn from $12.41bn as it upped its loan loss provisions due to the Covid-19 crisis.
The banking group’s reported revenue decreased 9% to $26.74bn from $29.37bn.
HSBC group CEO Noel Quinn said: “Our first half performance was impacted by the Covid-19 pandemic, falling interest rates, increased geopolitical risk and heightened levels of market volatility.
“Despite this, our Asia franchise showed resilience, and our Global Markets business delivered strong growth compared with last year’s first half.”