(Bloomberg) – Deutsche Bank AG and HSBC Holdings Plc’s first-quarter results have long seen how Europe’s two largest lenders deal with the trade war craze market.
Chief Financial Officer James von Moltke said in Tuesday’s earnings call that the German lender added €70 million ($80 million) to its regulations in the first quarter to reflect concerns about tariffs and the macro economy. Overall credit regulations for the quarter rose to 471 million euros, an early estimate.
Von Moltke said the allegations arose after Deutsche Bank modeled it applied more conservative parameters to customers who were particularly exposed to tariffs. A set of “more negative” macroeconomic assumptions are also used.
HSBC said it spent $150 million as part of the $900 million fee for the quarter to reflect the strengthening of economic uncertainty. If the decline in global growth is reduced with a 100% probability (rather than 25%), the bank will charge an additional $500 million.
CEO Georges Elehedery said the bank had conducted a series of stress tests on its revenue streams and credit portfolio to meet itself satisfied with the possible impact of a more severe recession caused by tariffs.
“We have looked at the differentiated approaches to various trade corridors or corridors between various trading groups and potential tariff implications,” he said in a call with reporters.
These figures suggest that lenders have survived turmoil so far – despite some time before U.S. President Donald Trump launched a series of tariffs against trading partners on April 2 “Liberation Day.” Elhedery said the bank currently expects the bank’s consequences to be relatively weak due to the low unit impact on revenue and no change in financial targets on lenders.
Nevertheless, the two banks highlighted the additional risks posed by tariffs on their prospects, even as they reiterated the 2025 target, while Deutsche Bank marked the “high uncertainty about the U.S. government’s tariff policy” that could have a significant impact on its assumptions.
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