- Banking group HSBC warned of increased loan impairment charges after it reported a slump in profit on higher-than-expected credit losses and falling interest rates.

For the six months ended 30 June, net profit fell 69% to $3.13bn on-year as revenue slipped 9% to $26.7bn. Pre-tax profit fell 65% to $4.32bn.

Reported profit in the first half also included a $1.2bn impairment of software intangibles, mainly in Europe.

In Asia, pre-tax profit fell to $7.4bn from $9.7bn. Reported credit losses and other credit impairment charges increased by $5.7bn to $6.9bn due 'to the impact of the Covid-19 outbreak and the forward economic outlook, and due to an increase in charges related to specific wholesale customers,' the company said.

HSBC's common equity tier 1 capital ratio was 15.0%, up 30bps from the fourth quarter of 2019.

Its net interest margin fell 18 basis points to 1.43%. Looking ahead, HSBC said could suffer a credit loss in the range of $8bn to $13bn for 2020.

'This range, which continues to be subject to a high degree of uncertainty due to Covid-19 and geopolitical tensions, is higher than at 1Q20 given the deterioration in consensus economic forecasts and actual loss experience during 2Q20,' the company said.

Lower global interest rates and reduced customer activity were expected to continue to put increasing pressure on revenue, it added.

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