HSBC Bank Canada reported a drop in its first-quarter profit compared with a year ago as it took a charge related to bad loans it expects due to the downturn in the economy.
The bank says it earned a profit attributable to common shareholders of $54 million or 11 cents per share for the quarter ended March 31. That’s compared with a profit of $158 million or 32 cents per share in the first three months of 2019.
A preliminary estimate by Statistics Canada suggests the Canadian economy pulled back 9% in March as steps to slow the spread of Covid-19 forced the closure of businesses across the country.
The price of oil also tumbled as demand fell and Russia and Saudi Arabia were embroiled in a price war.
HSBC Bank Canada says its latest quarter included a charge of $140 million due to the downturn in its outlook for the economy and its impact on its loan portfolio as well as non-performing loans in the energy sector driven by the drop in oil prices.
The charge compared a gain of $12 million in the same period a year earlier.