HSBC Profit Falls, Fraud Cases and Iran War Press Shares

HSBC recorded a profit decline after being pressured from two directions at once, namely the impact of the US-Israel war on Iran. (Wikimedia Commons - PageImp)

HSBC recorded a profit decline after being pressured from two directions at once, namely the impact of the US-Israel war on Iran and alleged fraud in the private credit sector.

According to a report by The Guardian quoted Tuesday, May 5, the profit of the London-based bank fell 4 percent in the first three months of this year. HSBC's profit fell by 100 million US dollars to 9.4 billion US dollars compared to the same period in 2025. Revenue actually increased by 6 percent to 18.6 billion US dollars.

The main pressure comes from the potential for credit losses to swell to 1.3 billion US dollars. Of that amount, 300 million US dollars is directly associated with the impact of the conflict in the Middle East.

HSBC also recorded a burden of 400 million US dollars related to alleged fraud in the UK. The burden arose from the exposure of secondary securitization in the investment banking division.

HSBC Finance Director Pam Kaur said the case was related to a loan to an unnamed private equity group. The group was then exposed to loans in the private credit sector.

Private credit is financing from non-bank institutions to companies or certain parties. This sector is growing rapidly, but is often highlighted because it is not as open as regular banking.

According to the Financial Times, the case was reported in relation to Mortgage Financial Solutions or MFS, a home loan company that collapsed in February amid allegations of fraud. HSBC declined to confirm the name of the company in question.

The MFS case previously hit Barclays. HSBC's rival bank in the UK recorded a burden of 228 million pounds sterling. The UK financial regulator has opened an investigation into the scandal.

Kaur said the HSBC case was "special". He stressed that the bank's exposure to the private credit sector reached 6 billion US dollars, a figure he called "very small" compared to HSBC's balance sheet of 1 trillion US dollars.

"We always pay close attention to private credit risks," Kaur said, quoted by The Guardian.

However, the market still reacted strongly. HSBC shares fell more than 5 percent on Tuesday morning and became the stock with the largest decline in the FTSE 100 index.