HSBC reported that it posted a US$858M loss in its Q4 2015. Interestingly, impairments on bad loans and credit risk provisions increased by 32% to US$1.64B in Q4, pushing the full year charges to US$3.7B (Source: Bloomberg).
Almost US$1.0B of the loan impairment charges were from the oil and gas sector.
So I would expect US banks to report further increase their credit risk provisions in the coming months as oil was much lower in Q1 2016 vs Q4 2015. Things could get ugly when the banks report their earnings in Q1 2016.
HSBC is the latest entry to "The Billion Dollar Loss Club." Including in the club are Credit Suisse, Deutsche Bank and Standard Charted.
As a result, HSBC will cut 25,000, just as Standard Charted cuts 25,000 jobs, Credit Suisse, 4,000 jobs, and Deutsche Bank, 30,000 jobs.
When the banks are cutting jobs, you know that their margins are squeezed and is a sure sign that all in the economy is not well.
Stay away from investing in any banks.
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