China property risks and Fed pivot puts pressure on HSBC, StanChart

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The near deserted Evergrande City Plaza shopping mall, developed by China Evergrande Group, in Beijing, China, on Wednesday, Jan. 31, 2024. China Evergrande Group creditors are set to recover just a fraction of the billions of dollars worth of the builder’s debt they hold, with most of its assets likely hard to access for liquidators. Bloomberg

HSBC Holdings Plc and Standard Chartered Plc may spell out the risks brought on by their China property operations and a Federal Reserve pivot when they report earnings.
Slimmer margins are predicted for HSBC and Singapore lender United Overseas Bank U11 – Ltd., as was on display when peers Commonwealth Bank of Australia and State Bank of India reported earlier.
Standard Chartered is set to post a jump in adjusted pretax profit for the quarter, though it faces challenges ahead. The lender is considering restructuring its institutional banking unit to improve returns, a move that may include job cuts. That’s as it’s been forced to set aside more reserves for souring loans linked to Chinese commercial property in recent years.
Loan charges might loom larger than consensus estimates for HSBC and its peers because of rising mortgage risks and residual bad debts from China’s commercial property, according to Bloomberg Intelligence analysts Francis Chan and Nicholas Ng.
Any comments on how lenders are preparing for a shift in federal interest rates will be of interest, as it may cast a shadow over the margins of major banks. UOB may see lower net interest margin sensitivity from a Fed pivot, Citi said.
Asia airlines saw a boom in air travel last year and momentum is expected to continue in 2024, helping carriers like Singapore Airlines C6L – Ltd. Australia’s Qantas Airways Ltd. will report right after an inquiry accused it of price gouging, dealing another blow to its reputation.

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