HSBC Flags Escalating Trade War Risks
Tariffs from the ongoing US-led trade war were significantly spotlighted in HSBC’s financial results, with an increase in credit provisions in anticipation of upcoming headwinds.
HSBC increased its credit provisions (expected credit losses or ECL) by around $200 million year-on-year to $900 million in the first quarter of 2025. This was done to «reflect heightened uncertainty and deterioration in the forward economic outlook due to geopolitical tensions and higher trade tariffs».
«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 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.»
Downside Scenario
HSBC notes that while its strategy remains unchanged, it admits that the external environment is now more uncertain and it has «assessed plausible downside scenarios that model significantly higher tariffs, and related impacts on growth, policy rates and inflation on our earnings».
«Under these scenarios, we anticipate a low single-digit percentage direct impact on the Group’s revenue and around $0.5 billion in incremental ECLs,» the bank commented. «The broader impacts of the current conditions are more difficult to quantify, and we will continue to monitor these as we formulate our ongoing outlook.»
Tariffs Named Dozens of Times
In total, the term «tariffs» appeared 28 times in HSBC’s first quarter earnings release, indicating the significant attention being placed on the trade war.
US President Donald Trump has imposed cumulative tariffs of 145 percent on all Chinese goods with as high as 245 percent rates on certain products. Trump and his aides have reportedly suggested that trade negotiations are underway while China has repeatedly denied the claims.
