More pain ahead after banking behemoth reports sharp fall in Q3 profits
HSBC, Europe’s biggest bank, is to accelerate its overhaul after its boss singled out the underperforming UK business just weeks after reports that thousands of jobs could be cut.
The group also revealed that profit before tax fell 18 per cent to $4.8 billion (£3.7bn) in the third quarter. This was well below the $5.3bn or so analysts had forecast.
Interim chief executive Noel Quinn said that “parts of the business, especially in Asia, held up well in a challenging environment”. However, he criticised other areas, including the UK.
“In some parts, performance was not acceptable, principally business activities within continental Europe, the nonring-fenced bank in the UK, and the US,” Quinn noted.
The boss, who took over in August after his predecessor was ousted by the board, said previous plans “are no longer sufficient” to improve these areas as revenue growth is expected to soften.
“We are therefore accelerating plans to remodel them, and move capital into higher growth and return opportunities,” Quinn added.
Earlier this year, it was reported that up to 10,000 jobs might be at risk at the group as Quinn plans to rein in costs. HSBC employs some 238,000 people globally.
Richard Hunter, head of markets at Interactive Investor, said: “Not only are these numbers disappointing and light of expectations, but it seems that things will get worse before they get better.
“The Q4 outlook from HSBC predicts a torrid time, and this follows any number of underperforming units of the banking behemoth failing to deliver in this period.
“HSBC is on a punchy valuation, which will become increasingly difficult to justify given the clear squeeze on the key metrics.”