03 August 2020 20:30
HSBC plans to speed up job cuts after interim profits plunged and the bank said bad loans linked to the coronavirus could reach $13bn (£9.8bn). HSBC boss Noel Quinn said it will "accelerate" an earlier restructuring plan which included axing 35,000 jobs. Europe's biggest bank reported a 65% drop in pre-tax profits to $4.3bn for the first half of the year - much steeper than analysts had forecast. HSBC also said it set aside between $8bn and $13bn this year for bad loans as it expects more people and businesses to default on their repayments because of the coronavirus pandemic. The bank said it had given more than 700,000 payment holidays on loans, credit cards and mortgages, providing more than $27bn in customer relief.
HSBC has also been hit by the low interest rate environment, which squeezes a bank's profit margins on the loans it provides. In June, the UK's largest bank said it would push ahead with its plan to cut 35,000 jobs from a global workforce of 235,000 as part of a major restructuring announced in February. While HSBC is headquartered in London, more than half of its profits come from the Asian financial hub of Hong Kong. The bank is dealing with a number of challenges, including tensions between China and the west. It is currently embroiled in a political battle over its support of China's national security law in Hong Kong while pushing ahead with the major restructure of its global banking operations.
HSBC, along with rival banking group Standard Chartered, have come under fire for their support of China's controversial national security law for Hong Kong. US Secretary of State Mike Pompeo and UK politicians criticised HSBC for supporting China's new legislation, which means people face prosecution for speaking out against Beijing. Image copyright Reuters Image caption US Secretary of State Mike Pompeo has criticised HSBC's support for China's new security law Last week, Standard Chartered restated its commitment to Hong Kong when it released its first-half results. Standard Chartered's group chairman José Viñals said: "We are convinced that more collaboration - not less - is the best way to find a sustainable equilibrium in these complex situations, but we do not expect an easy or quick resolution. "We do believe, however, that Hong Kong will continue to play a key role as an international financial hub and we are fully committed to contributing to its continued success," he added.
Bank also forced to put aside another £2.9bn to cover bad debt in coronavirus crisis HSBC is to accelerate plans to cut 35,000 jobs globally after the Covid-19 crisis forced the bank to put aside another $3.8bn (£2.9bn) to cover bad debts. The bank with headquarters in London announced on Monday that pre-tax profits plunged more than 80% to $1.1bn in the second quarter, down from $6.2bn during the same period last year. The bank, which makes most of its profits in China and Hong Kong, reported a $3.8bn loan loss charge, almost seven times the $555m it put aside for bad debts last year, and higher than the $2.7bn predicted by analysts. About $1.5bn of the expected credit losses were linked to its UK business, signalling fears that Britain may be particularly affected by the crisis. HSBC, which already took a $3bn charge in the first quarter, expects loan loss charges linked to the coronavirus crisis to reach $8bn-$13bn by the end of 2020. It warned that the outlook would depend on the path of the pandemic and rising geopolitical tensions that could affect key markets including Hong Kong and the UK. HSBC has come under fire over its support for China's controversial security laws in Hong Kong and also been attacked by Beijing over its alleged role in the arrest of a Huawei executive. "Current tensions between China and the US inevitably create challenging situations for an organisation with HSBC's footprint," the HSBC chief executive, Noel Quinn, said. "We will face any political challenges that arise with a focus on the long-term needs of our customers and the best interests of our investors." He said the lender would ramp up cost-cutting plans announced in February, which were originally estimated to involve 35,000 job cuts across its global business. "Having paused parts of our transformation programme in response to the Covid-19 outbreak, we now intend to accelerate implementation of the plans we announced in February," Quinn said. Quinn said travel restrictions and a rise in homeworking meant the bank would be able to cut more costs than planned. Hong Kong (CNN Business) HSBC (HSBC) said on Monday that escalating tensions between China and the West are creating "challenging situations" for its business after the global bank reported a 65% plunge in profits in the first half of 2020 due to the coronavirus pandemic. The London-based lender, which makes most of its money in Asia, said Monday that pre-tax profit in the first six months of the year fell 65% to $4.3 billion compared to the same time last year, as revenue fell, the coronavirus crisis hit and credit losses were worse than expected. CEO Noel Quinn said US-China tensions had so far not had a material impact on earnings but he acknowledged that "current tensions between China and the US inevitably create challenging situations for an organization with HSBC's footprint." "We will face any political challenges that arise with a focus on the long-term needs of our customers and the best interests of our investors," he added. The bank warned that expected credit losses for 2020 could hit as much as $13 billion this year, worse than earlier estimates "given the deterioration in consensus economic forecasts." Before the onset of the virus, HSBC was already under pressure owing to China-US tensions and Brexit HONG KONG - HSBC on Monday reported a 69-percent slump in net profit, joining a number of major banks whose earnings have been slammed by the coronavirus fallout. HSBC announced earnings of $3.1 billion (2.6 billion euros) compared with almost $10 billion in the first six months of 2019, as spiralling China-US tensions also hurt the British-based but Asia-focused lender. Alongside HSBC results, top French bank Societe Generale on Monday announced a second-quarter loss of more than one billion euros as the pandemic forced it to set aside more provisions against bad loans. UK banks Barclays, Lloyds and NatWest all last week reported huge financial hits linked to the pandemic's fallout. Credit Suisse meanwhile saw net profit jump almost a quarter in the April-June period, also on investment banking gains. Even though banks "are much better prepared for this economic onslaught than during the financial crisis of over a decade ago... HSBC said that its pre-tax profit slid 64 percent to $4.3 billion in the first half while revenue was down nine percent at $26.7 billion. Chief executive Noel Quinn described the first six months of the year as "some of the most challenging in living memory". Even by the standards of the current economic maelstrom engulfing global banks, HSBC has had a torrid time. The London-headquartered bank embarked on a huge cost-cutting initiative at the start of the year, including plans to slash about 35,000 jobs as well as trimming fat from less profitable divisions, primarily in the United States and Europe. The coronavirus upended some of that cost-cutting drive with banks hammered by market volatility and the economic slowdown caused by the pandemic. But HSBC has a further headache--geopolitical tensions via its status as a major business conduit between China and the West. HSBC makes 90 percent of its profit in Asia, with China and Hong Kong being the major drivers of growth. It vocally backed a draconian national security law that Beijing imposed on Hong Kong in June to end a year of unrest and pro-democracy protests. Quinn referenced the bank's growing political vulnerability in Monday's results statement. "Current tensions between China and the US inevitably create challenging situations for an organisation with HSBC's footprint," he said. "However, the need for a bank capable of bridging the economies of East and West is acute, and we are well placed to fulfil this role," he added. The bank's Asia operations continued to show "good resilience", Quinn said, with profit before tax of $7.4 billion.