HSBC has reported a drop in profits for the first quarter of 2026, partly due to a $400m fraud-related credit loss in the United Kingdom. The charge, which affected the bank's Corporate and Institutional Banking division, is understood to involve loans made to a private equity firm that was exposed to private credit-related loans. This comes amid growing concern over the opaque private credit industry.
Financial details
The $400m charge pushed HSBC’s estimated credit loss for the first quarter to $1.3bn. Additionally, the bank set aside $300m to reflect heightened uncertainty and a deterioration in the economic outlook due to the conflict in the Middle East. Overall, pre-tax profits fell by $100m compared with the same period last year, to $9.4bn in January-March 2026.
HSBC stated that the decrease reflected higher expected credit losses and other credit impairment charges in the first quarter, an adverse impact from notable items, and a rise in operating expenses. The bank is sticking with its financial targets, arguing it is well-positioned to handle the changes and uncertainties in the global environment.
Outlook and strategy
In a statement to shareholders, HSBC said: “The macroeconomic outlook is facing heightened uncertainty, creating volatility in both economic forecasts and financial markets resulting in both tailwinds and headwinds. The Group is well-positioned to manage the impacts of these challenges through our high-quality revenue streams, conservative approach to credit risk and strong deposit franchise. Supporting our clients through this volatile period is a top priority.”
The bank’s results come amid a busy reporting season for financial institutions. Later today, UK car sales for April and the US trade report for March are due, along with the US service sector PMI.
