HSBC Reports 26% Drop in Pre-Tax Profits Amid China Bad Debts and Economic Uncertainty

Europe's largest lender, HSBC, fell short of market expectations with a 26% decline in pre-tax profits to $15.8 billion for the first half of the year. The bank's quarterly performance fared worse, dropping 29% to $6.33 billion year-over-year, primarily due to mounting bad debts in China.

CEO George Elhedery cited 'structural challenges' in the global economy as the Core issue, compounded by fiscal vulnerabilities and broad-based tariffs. These factors have created what he called 'a perfect storm' for interest rate forecasting and inflationary pressures. Analysts note HSBC's overreliance on net interest income leaves it particularly exposed compared to competitors like Standard Chartered.

Operating expenses ROSE 10% due to restructuring costs and technology investments, further squeezing margins. Despite these headwinds, HSBC maintains its position to weather tariff impacts, projecting minimal direct revenue effects. Second quarter revenues came in at $16.5 billion, narrowly missing the $16.67 billion forecast.