HSBC has set aside $876 million to cover expected bad loans, warning of growing risks from President Trump’s escalating trade war and protectionist policies that are disrupting global commerce.
In its first-quarter results, the FTSE 100-listed bank revealed that $150 million of the provision was linked directly to “deterioration in the forward economic outlook” caused by sweeping new US tariffs. The move weighed on the bank’s performance, with pre-tax profits falling to $9.5 billion from $12.65 billion a year earlier, when HSBC had benefited from the one-off sale of its Canadian business.
Despite the drop, HSBC’s results still came in ahead of City analysts’ expectations of $7.8 billion. However, the bank cautioned that it could face an additional $500 million in credit losses under “plausible downside scenarios that model significantly higher tariffs, and related impacts on growth, policy rates and inflation”.
The warnings reflect HSBC’s unique vulnerability to the fracturing global trade order. Although headquartered in London today, HSBC was founded in Hong Kong 160 years ago and has long served as a financial bridge between East and West. Hong Kong remains its single largest market, and any breakdown in trade flows between China and the United States risks destabilising its business model.
“The macroeconomic environment is facing heightened uncertainty, in particular from protectionist trade policies, creating volatility in both economic forecasts and financial markets and adversely impacting consumer and business sentiment,” the bank said. “Supporting our clients through this volatile period is our top priority.”
The intensifying trade tensions are among the first major challenges facing Georges Elhedery, HSBC’s new chief executive, who took over in September. Elhedery is also overseeing a major restructuring, aiming to slash $1.5 billion in costs by the end of next year—a plan expected to result in thousands of job losses.
Despite the turbulence, HSBC sought to reassure investors by announcing a $3 billion share buyback and declaring an interim dividend of 10 cents a share, equivalent to a further $1.765 billion payout.
As Washington and Beijing remain locked in an increasingly acrimonious standoff, HSBC’s results highlight the mounting risks for institutions built on free-flowing global trade—and the difficult balancing act ahead for the bank as it navigates an era of protectionism and geopolitical volatility.
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HSBC sets aside $876m for bad loans amid fallout from Trump’s trade war