HSBC profits fall amid $400m fraud-related charge and Iran war
HSBC has taken a $1.3bn (£961m) hit to profits, amid the fallout from the US-Israel war on Iran and fraud in the troubled private credit sector.The London-headquartered bank said profits fell 4% in the first three months of the year, dropping $100m to $9.4bn, compared with the same period in 2025.Revenue increased 6% to $18.
6bn.The profit decline was linked to a jump in the potential losses it could see on soured loans to $1.3bn, which included $300m specifically linked to the impact of the conflict in the Middle East.HSBC also reported a $400m “fraud-related, secondary, securitisation exposure” in the UK, related to its investment banking division.The bank’s chief financial officer, Pam Kaur, explained that the charge involved loans that HSBC had made to an unnamed private equity group, which was then exposed to private credit-related loans.
The case reportedly relates to the collapse of the home loan lender Mortgage Financial Solutions (MFS), to which HSBC was exposed through loans made to Apollo’s asset-backed lending unit Atlas SP, according to the Financial Times, which cited people familiar with the matter.HSBC refused to confirm the names of the companies involved in the suspected fraud.It comes days after HSBC’s UK rival Barclays said it had taken a £228m hit from MFS, which collapsed in February amid allegations of fraud.The UK’s financial regulator has launched an investigation into the scandal.While related to fraud, the HSBC charge shines light on the way high street banks could be affected when things go wrong in private credit, and compounds concerns about the opaque nature of the industry.
Kaur said the case was “idiosyncratic” and that the bank was careful in its dealings with the private credit sector.She added that HSBC’s total exposure to the industry was worth $6bn, which was “very small” compared with the bank’s $1tn balance sheet.“We’ve always been very mindful of private credit risks,” she said.Kaur added: “In all such situations we do a broad read across, look at all high-risk concentrations and exposures across the board, and we don’t see anything comparable there.But as a follow-up, of course … when we are even exposed in a secondary context to this kind of underlying business, we have seen what we can do more, in terms of the additional due diligence.
”The lender’s shares dropped more than 5%, putting it among the biggest fallers on the FTSE 100 on Tuesday.Despite the $300m put aside to protect against defaults linked to the Iran war, Kaur downplayed the impact of the conflict on HSBC’s operations.She said that while some clients were borrowing more money, business deals were still “flowing through”.“In terms of ongoing activity on the ground, we don’t see as many changes.And more importantly, credit portfolio has remained resilient through this period as well,” Kaur told reporters.
“This is very similar to what we see in times of stress,” she said, noting that some of the money put aside in the aftermath of Russia’s full-scale invasion of Ukraine was eventually released.“And this time around, obviously we’d see how the conflict progresses and, and if we see stability in our books, we would release those reserves.”The finance chief added that the bank would continue investing in its Middle Eastern wealth business, and that while some bank staff went abroad during recent holidays, most had returned to their desks.“For now, most people are back, and we just hope that things stay stable over the next few weeks.”
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Four in five Britons worried Iran war will make food more expensive, poll finds
Four in five people are worried that the Iran war will make food more expensive, according to a new poll, as businesses warned the “window is closing” for ministers to cut energy costs for UK retailers.Research by Opinium found that 80% of people are worried about the rising price of groceries, which would come from retailers passing on cost increases to consumers, while 73% expect the conflict to push up prices of other products.The blockade of the strait of Hormuz has already sent oil and gas prices soaring, caused a crisis in the global fertiliser industry, and has made shipping and distribution more expensive.The effects have so far been felt most acutely in sectors such as manufacturing and chemicals, which use high amounts of gas. The UK chancellor, Rachel Reeves, announced more support on bills for the most energy-intensive businesses in April, but now faces fresh calls to cut costs for the food sector
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