XVAs take $346m bite out of HSBC’s trading profits
Derivatives valuation adjustment impact pushes trading profits down 49%
Huge adjustments to the valuation of derivatives (XVAs) inflicted $346 million of losses on HSBC in the first quarter, contributing to a 49% year-on-year decline in trading profits.
The hit was recorded at the UK firm’s global banking and markets (GB&M) division, and was more than double an XVA loss posted in Q3 2019. In Q4 2019, GB&M reported a $189 million add-on to revenues because of these valuation adjustments.
Trading profits at GB&M for Q1 came in at $800 million, down from $1.6 billion
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