The UK’s biggest bank posted pre-tax profits of $4.3bn (£3.3bn), compared to $12.4bn for the same period last year.
The fall was much larger than analysts had forecast as HSBC was hit by loans turning bad and interest rates remaining low.
While HSBC is headquartered in London, more than half of its profits come from the Asian financial hub of Hong Kong.
The bank is dealing with a number of challenges, not just the financial downturn caused by the coronavirus.
It is currently embroiled in a political battle over its support of China’s national security law in Hong Kong while pushing ahead with a major restructuring of its global banking operations.
“We will face any political challenges that arise with a focus on the long-term needs of our customers and the best interests of our investors,” HSBC’s group chief chief executive Noel Quinn said on Monday.
“Current tensions between China and the US inevitably create challenging situations for an organisation with HSBC’s footprint. However, the need for a bank capable of bridging the economies of east and west is acute, and we are well placed to fulfil this role.”
HSBC said it has set aside $8bn to $13bn this year for bad loans as it expects more people and businesses to default on their repayments. This is higher than previously budgeted for, taking into account the effects of the economic downturn.
The bank said it has given more than 700,000 payment holidays on loans, credit cards and mortgages, providing more than $27bn in customer relief.
HSBC has also been hit by the low interest rate environment, which squeeze a bank’s profit margins on the loans it provides. The lower the interest rate, the less a bank makes on its lending.
In June, the UK’s largest bank, said it will push ahead with its plan to cut 35,000 jobs from a global workforce of 235,000 as part of a major restructuring announced in February.
HSBC chairman Mark Tucker is overseeing the programme to shrink the bank’s operations in Europe and the US.
On Monday, Mr Quinn said that the bank will “accelerate implementation of the plans we announced in February” adding that “our operating environment has changed significantly since the start of the year.”
“We will also therefore look at what additional actions we need to take in light of the new economic environment to make HSBC a stronger and more sustainable business.”
The job cuts had initially been put on hold during the coronavirus outbreak but are now back on the agenda.
HSBC has previously said it could wind down or sell its US retail banking operations which could involve shrinking its 224-strong US branch network by about 30%.
Caught in crosshairs
HSBC, along with rival banking group Standard Chartered, came under fire for coming out in support of China’s controversial national security law for Hong Kong.
Also in June, US Secretary of State Mike Pompeo and UK politicians criticised HSBC for supporting China’s new legislation, which means people face prosecution for speaking out against Beijing.
Mr Pompeo said the Chinese Communist Party’s (CCP) “browbeating” of HSBC “should serve as a cautionary tale”.
Both HSBC and Standard Chartered have their headquarters in London but earn a significant portion of their profits in Asia, with Hong Kong serving as a hub for the region.
Last week, Standard Chartered also released its half-yearly results and restated its commitment to Hong Kong.
In a statement, Standard Chartered’s group chairman José Viñals addressed the international tensions over China’s policies in Hong Kong:
“We are convinced that more collaboration – not less – is the best way to find a sustainable equilibrium in these complex situations, but we do not expect an easy or quick resolution.
“We do believe, however, that Hong Kong will continue to play a key role as an international financial hub and we are fully committed to contributing to its continued success,” he added.