HSBC goes east as profits slump
HSBC is to focus more on Asia and cut more jobs after its profits slumped more than a third due to Covid.
The bank’s chief executive Noel Quinn said its annual pre-tax profits had fallen 34.2 per cent to £6.2billion, while its revenues dropped 10.1 per cent to £35.8billion.
HSBC’s profits dived due to £6.2billion of losses on loans.
This was higher than expected because of the virus crisis and its effect on the global economy, as well as the ultralow interest rate environment. In 2019 expected credit losses were just £1.8billion.
In a major shift, the London-based banking group is looking to relocate more of its top management team to Asia, where the bulk of its profits are made. It also plans to expand its wealth management business.
It will target key markets including China, Hong Kong and Singapore. HSBC is also quitting US and French retail banking.
The firm aims to cut up to 40 per cent of jobs in head office operations but did not give a figure. The bank also plans to take advantage of the trend towards home working by cutting its office space by about 40 per cent. It will retain its HQ at London’s Canary Wharf but give up other major sites in the capital.
Yesterday Mr Quinn said: “The growth plans we are announcing today aim to establish HSBC as a dynamic, efficient and agile global bank with a digital-first mindset, capable of providing a world-leading service to our customers and strong returns for our investors. We intend to deliver them at pace.”
The drop in HSBC’s profitability saw Mr Quinn ditch its target of producing a 10-12 per cent return for the capital it is using. It will try instead for 10 per cent over the medium term.
HSBC also said it will resume dividends, paying out 10.6p per share. It will be the first since October 2019.
The bank froze payouts to shareholders after a request from the Bank of England at the start of the pandemic.