On May 5, 2026, HSBC took a $1.3 billion hit to profits. This included a $400 million fraud-related charge linked to its investment banking division. The bank’s shares fell more than 5%, making it the biggest faller on the FTSE 100.

HSBC’s total exposure to the private credit sector is worth $6 billion. The financial regulator in the UK has launched an investigation into the fraud scandal involving Mortgage Financial Solutions.

The bank reported a revenue increase of 6%, reaching $18.6 billion in the first quarter of 2026. However, the profit decline was partly attributed to a $300 million increase in potential losses due to the ongoing conflict in the Middle East.

Analysts are concerned about these developments. Pam Kaur stated, “We’ve always been very mindful of private credit risks.” Dan Coatsworth noted that “the sizeable fraud-related charge is a reminder that risks don’t only exist in more far-flung parts of the world.” Richard Hunter added, “These credit impairments largely blotted the copybook for this quarter.” Chris Beauchamp remarked on how “the Hormuz crisis looms large in the results, casting a shadow over an otherwise solid set of numbers.”

The situation highlights ongoing challenges within HSBC and raises questions about future stability in the private credit sector.

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