HSBC to ‘remodel’ after profits plunge 18%
HSBC’s global business took a beating last quarter, and the London-based bank is warning of more pain ahead.
HSBC pulled in pre-tax profit of $4.8 billion for the three months ended in September, a drop of 18% compared to the same period last year, the bank said in an earnings report on Monday. Revenue fell 3% to $13.4 billion.
The bank cited “challenging market conditions” and “ongoing economic uncertainty” for a slump in its European and American business units.
“Our previous plans are no longer sufficient to improve performance for these businesses,” HSBC said Monday. “We are therefore accelerating plans to remodel them, and move capital into higher growth and return opportunities.”
HSBC faces a growing list of negative headwinds, including falling interest rates, which make it harder to generate profit on loans and mortgages, and geopolitical uncertainty in top markets.
The lender announced in August that it would reduce its headcount by up to 2%, or roughly 4,700 positions. The move came as HSBC’s CEO stepped down after less than two years on the job.
Earlier this month, the Financial Times reported that HSBC was planning to cut up to 10,000 additional jobs, or more than 4% of its workforce. HSBC declined to comment on that report.
Hong Kong was a bright spot. HSBC said performance in the financial hub was “resilient,” a noteworthy result given the political unrest and protests that have rocked the city for five months. HSBC reported pre-tax profit in Asia rose 4% in the third quarter, to $4.7 billion, representing the overwhelming majority of its earnings for the quarter.
Shares in HSBC dipped 3.5% in early London trading.