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Commuters wearing face masks travel on a tram past HSBC signage outside the bank’s local headquarters in Hong Kong on April 28, 2020.
anthony wallace/Agence France-Presse/Getty Images
HSBC Holdings was a drag on the FTSE 100 on Monday, as the banking giant issued cautious guidance alongside a predictably dire first-half financial report.
HSBC shares HSBA, -3.75% dropped 5% as it said net profit for the period plummeted 77% to $1.98 billion when the bank, like its rivals, reported a surge in loan-loss provisions. Revenue fell 9%, as markets activity helped to compensate for a fall in interest rates and a decline in the market value of its life-insurance investments.
HSBC said it is reviewing its dividend policy, which for now is halted, and will give an update on that as well as financial targets at its year-end results. One positive was HSBC’s ability to cut costs, with adjusted costs down 7% in the second quarter.
Analysts at Citi said HSBC’s call with investors was “cautious in tone, with considerable uncertainty noted over the macroeconomic outlook globally, especially in the U.K., and ongoing rate headwinds.”
HSBC wraps up what has been a rough month for U.K. banks, all of which are facing compressed margins.
Rio Tinto RIO, +3.00%, however, led gains among the mining sector, which helped the FTSE 100 UKX, +1.14% turn positive after early losses. Encouraging manufacturing data out of China and Europe helped steer markets higher. U.S. manufacturing data are set for release later, as is the IHS Markit/CIPS U.K. manufacturing purchasing managers index , which was 53.3 in July, up from 50.1 in June, but below the flash estimate of 53.6.
