- HSBC warned of a 'material reduction' in profit this year after reporting a 48% plunge in first-quarter earnings pinned on the Covid-19 crisis and a collapsing oil price.

The company also experienced a ramp-up in costs led by higher-than-expected credit provisions.

Pre-tax profit for the three months through March fell 48% to $3.2bn.

Revenue fell 5% as a result of 'adverse market impacts in life insurance manufacturing and adverse valuation adjustments in global banking and markets, offsetting a resilient revenue performance, notably in Asia, global markets, retail banking and global private banking,' the company said.

Net interest margin fell 2 basis points to 1.54% from the fourth quarter of 2019, and down 5 basis points on-year.

HSBC warned of 'material' downward pressure on net interest margin in future quarters, as it incurred the full impact of the first-quarter market interest rate reductions.

Common equity tier 1 (CET1) capital ratio, a measure of capital resilience, fell to 14.6% from 14.7% in the fourth quarter last year.

Looking ahead, the company said the outlook for world economies in 2020 had 'substantially worsened' in the past two months, and warned of further expected credit losses and other credit impairment charges (ECL).

'The impact and duration of the Covid-19 crisis will likely lead to higher ECL and put pressure on revenue due to lower customer activity levels and reduced global interest rates,' it said.

'We plan to reduce operating expenses to partly mitigate the reduction in revenue and we intend to continue to exercise cost discipline, while maintaining strategic investment.'

'These factors are expected to lead to materially lower profitability in 2020, relative to 2019.'

At 8:08am: [LON:HSBA] HSBC Holdings PLC share price was -6.07p at 410.23p

Story provided by