HSBC hit by $400m UK fraud-related charge; Rachel Reeves ‘clashed with Scott Bessent’ over Iran war criticism – business live
Introduction: HSBC profits hit by fraud-related credit loss in UK
Good morning, and welcome to our rolling coverage of business, the financial markets and the world economy.
The bank reporting season rolls on, with HSBC revealing a drop in profits in the last quarter – partly due to a fraud-related charge in the UK.
HSBC reported it had suffered a $400m “ fraud-related, secondary, securitisation exposure” in the UK, in its Corporate and Institutional Banking (‘CIB‘) business.
This $400m charge is understood to involve loans made to a private equity firm, which was then exposed to private credit-related loans – at a time when concern about the opaque private credit industry is growing.
The $400m charge pushed up HSBC’s estimated credit loss for the first quarter of this year, to $1.3bn.
HSBC also 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 first quarter of 2025, to $9.4bn in January-March this year.
HSBC says:
The decrease reflected higher expected credit losses and other credit impairment charges (‘ECL‘) in 1Q26, 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.
It tells shareholders:
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 agenda
-
9am BST: UK car sales for April
-
1.30pm BST: US trade report for March
-
3pm BST: US service sector PMI
Key events
HSBC shares drop
Ouch. Shares in HSBC have dropped by over 5% at the start of trading in London.
HSBC (-5.2%) are the biggest faller on the FTSE 100 share index, after the bank reported a drop in profits this morning and that $400m fraud-related loss in the UK.
On the upside, HSBC is expecting to benefit from higher interest rates this year.
The bank has lifted its forecast for Net Interest Income (NII) – which is the difference between the revenue it gets from interest-bearing assets (such as loans, investments) and the expenses paid on liabilities (such as customers’ saving deposits, and its own debt).
HSBC expects banking NII of around $46bn in 2026, “reflecting an improved interest rate outlook.
It had previously forecast NII of “at least $45bn” for this year.
HSBC has lifted its forecast for expected credit losses this year, following that UK fraud-related $400m charge, and the Iran war.
The bank now expects an ECL [expected credit loss] charge as a percentage of average gross loans to be around 45bps this year, which it says reflects “ongoing uncertainty in the outlook”.
That’s up from its previous ECL guidance for 2026 was around 40bps of average gross loans.
FT: Rachel Reeves rowed with Scott Bessent over Iran war criticism
The Financial Times have a corking story this morning – UK chancellor Rachel Reeves had a “fierce row” with US Treasury secretary Scott Bessent in Washington last month, they say.
The pair of finance ministers clashed over the Iran war on the sidelines of the IMF’s Spring Meeting, after Reeves said she was “not convinced” that “we are safer today than we were a few weeks ago”.
That criticism led Bessent to “berate” Reeves, insisting the world was safer because of the US-Israeli war against Iran, even invoking the spectre of Tehran launching a nuclear attack on London.
As the FT reports, Reeves hit back:
Reeves responded angrily by telling Bessent she did not work for him and disliked how he had spoken to her.
She also reiterated her argument about the Iran conflict lacking clear goals and not necessarily making the world safer.
Reeves was notably critical of the Iran war as she headed to the IMF gathering, telling the Daily Mirror:
“This is a war that we did not start. It was a war that we did not want. I feel very frustrated and angry that the US went into this war without a clear exit plan, without a clear idea of what they were trying to achieve. And as a result the strait of Hormuz is now blocked.”
Introduction: HSBC profits hit by fraud-related credit loss in UK
Good morning, and welcome to our rolling coverage of business, the financial markets and the world economy.
The bank reporting season rolls on, with HSBC revealing a drop in profits in the last quarter – partly due to a fraud-related charge in the UK.
HSBC reported it had suffered a $400m “ fraud-related, secondary, securitisation exposure” in the UK, in its Corporate and Institutional Banking (‘CIB‘) business.
This $400m charge is understood to involve loans made to a private equity firm, which was then exposed to private credit-related loans – at a time when concern about the opaque private credit industry is growing.
The $400m charge pushed up HSBC’s estimated credit loss for the first quarter of this year, to $1.3bn.
HSBC also 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 first quarter of 2025, to $9.4bn in January-March this year.
HSBC says:
The decrease reflected higher expected credit losses and other credit impairment charges (‘ECL‘) in 1Q26, 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.
It tells shareholders:
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 agenda
-
9am BST: UK car sales for April
-
1.30pm BST: US trade report for March
-
3pm BST: US service sector PMI
