Latest news with #PamKaur
Yahoo
29-04-2025
- Business
- Yahoo
HSBC Braces for $1.6 Billion Hit in China Shakeup -- But Investors Are Getting a $3 Billion Surprise
HSBC Holdings (NYSE:HSBC) is staring down a potential pretax loss of up to $1.6 billion after China's Finance Ministry announced a $69 billion recapitalization for four major state-owned banks, including Bank of Communications (BoCom). Following the capital injection, HSBC's stake in BoCom is expected to dilute from 19% to 16%, though CFO Pam Kaur emphasized it won't touch the bank's capital ratios. Despite the near-term accounting hit, management stressed that the move strengthens BoCom's CET1 ratio, positioning it to compete harder in a market still battling real estate woes and escalating US-China tensions. Warning! GuruFocus has detected 2 Warning Sign with HSBC. China's property sector slump and rising trade pressures continue to drag on the broader financial system, prompting Beijing to shore up its banking giants. BoCom posted a slim 0.9% profit growth last year, mainly driven by reduced credit impairment charges, even as net interest margins stayed under pressure. HSBC's CEO Georges Elhedery voiced support for the recapitalization, calling it a strategic positive that bolsters BoCom's ability to grow a critical move as asset quality risks across the Chinese banking sector remain stubbornly high. Meanwhile, HSBC dropped stronger-than-expected Q1 numbers and rolled out a fresh $3 billion share buyback, aiming to steady investor nerves in a shaky market. Management also flagged that even under a scenario of sharply higher global tariffs, the direct hit to revenue would likely stay in the low single digits, with about $500 million in potential credit losses. Last year, HSBC already absorbed a $3 billion impairment tied to its original $1.75 billion investment in BoCom, underscoring the complex but enduring ties between Europe's biggest trade bank and China's evolving financial battlefield. This article first appeared on GuruFocus.
Wall Street Journal
29-04-2025
- Business
- Wall Street Journal
HSBC and Deutsche Bank Brace for Economic Hit From Tariffs
Two of Europe's largest banks set aside more money for soured loans, preparing for the risk that President Trump's trade war hurts the global economy. London-listed HSBC—a huge funder of international trade—raised its expected credit losses to $900 million, up about $200 million from a year ago. In what it called a 'consensus downside' scenario, where higher tariffs slow global growth, HSBC said expected losses could rise by another $500 million and revenue could be cut by a few percentage points. The provision reflects the possibility that tariffs lead to slower growth, higher unemployment and tighter financial conditions, said Pam Kaur, HSBC's chief financial officer, adding that the bank's analysis focused on sectors including autos and textiles. HSBC hasn't seen any signs of financial stress among customers, she said. Similarly, Deutsche Bank took a provision of 130 million euros, or about $148.5 million, citing an uncertain "geopolitical and macro-economic outlook in the U.S."
