Asia-focused banking giant HSBC Holdings PLC yesterday axed 35,000 jobs, far more than expected, and posted slumping annual profits, as it warned over the financial impact of COVID-19.
Pre-tax profits tumbled by a third to US$13.3 billion last year from a year earlier, largely owing to a US$7.3 billion write-off related to its investment and commercial banking businesses in Europe.
The London-based lender added in a results statement that it hopes to cut its global workforce by 15 percent to 200,000 staff over the next three years.
Photo: AFP
Commentators had expected 10,000 job cuts.
The radical overhaul comes as HSBC streamlines operations in the US and Europe, although no details were given on where the axe would fall.
HSBC has been trying to lower costs as it faces a multitude of uncertainties caused by the grinding US-China trade dispute, the UK’s departure from the EU and now COVID-19 in China.
“The group’s 2019 performance was resilient. However, parts of our business are not delivering acceptable returns,” interim chief executive Noel Quinn said.
“We are therefore outlining a revised plan to increase returns for investors, create the capacity for future investment and build a platform for sustainable growth,” he said.
“We have already begun to implement this plan, which my management team and I are committed to executing at pace,” Quinn added.
While its Asia business has done well in the past few years — fueled primarily by China — Europe and the US have disappointed.
Quinn, who took over as acting CEO after the shock ousting in August last year of John Flint, has been tasked with transforming the sprawling international bank, which spans more than 50 countries, but makes the vast majority of its profit in Asia.
Turning to COVID-19, HSBC said the outbreak in China had impacted its outlook.
“We continue to monitor the recent coronavirus outbreak, which is causing economic disruption in Hong Kong and mainland China and may impact performance in 2020,” the bank said.
The restructuring plans are the biggest shake-up since 2012, when HSBC was caught up in a Mexican money-laundering scandal.
The bank said it was targeting US$4.5 billion in cost cuts by 2022, with restructuring costs of about US$6 billion.
Many of the cutbacks will be in the European and US investment banking sectors, while units in more profitable Asia and the Middle East would be bolstered.
In the US, the bank said it planned to reduce its branch network by about 30 percent, consolidate back and middle-office activities, and lower operating expenses by 10 to 15 percent.
For its non-UK Europe sector, the bank said it would “reduce our sales and trading and equity research in Europe and transition our structured products capabilities from the UK to Asia.”
Riskier assets would be reduced by 35 percent in Europe and 45 percent in the US.
Overall, the bank said it hoped to achieve a lower adjusted cost base of US$31 billion or below in 2022.
The disappointing results sent HSBC’s shares sliding 5 percent in London and by 2.2 percent in Hong Kong, as it also reported a loss before tax of US$3.9 billion in the fourth quarter.
The bright spot for HSBC remains Asia, which has accounted for half of its revenue and 90 percent of the group’s profit in the past few years.
Adjusted profit before tax in Asia last year was up 6 percent to US$18.6 billion.
Even in Hong Kong, which was battered by months of seething pro-democracy protests last year, the banking giant posted a 5 percent increase in adjusted pretax profit to US$12.1 billion.
Yesterday’s statement gave little clarity on whether Quinn would get the CEO job full time, saying a permanent CEO would be appointed within six to 12 months.
Stephen Garrett, a 27-year-old graduate student, always thought he would study in China, but first the country’s restrictive COVID-19 policies made it nearly impossible and now he has other concerns. The cost is one deterrent, but Garrett is more worried about restrictions on academic freedom and the personal risk of being stranded in China. He is not alone. Only about 700 American students are studying at Chinese universities, down from a peak of nearly 25,000 a decade ago, while there are nearly 300,000 Chinese students at US schools. Some young Americans are discouraged from investing their time in China by what they see
MAJOR DROP: CEO Tim Cook, who is visiting Hanoi, pledged the firm was committed to Vietnam after its smartphone shipments declined 9.6% annually in the first quarter Apple Inc yesterday said it would increase spending on suppliers in Vietnam, a key production hub, as CEO Tim Cook arrived in the country for a two-day visit. The iPhone maker announced the news in a statement on its Web site, but gave no details of how much it would spend or where the money would go. Cook is expected to meet programmers, content creators and students during his visit, online newspaper VnExpress reported. The visit comes as US President Joe Biden’s administration seeks to ramp up Vietnam’s role in the global tech supply chain to reduce the US’ dependence on China. Images on
New apartments in Taiwan’s major cities are getting smaller, while old apartments are increasingly occupied by older people, many of whom live alone, government data showed. The phenomenon has to do with sharpening unaffordable property prices and an aging population, property brokers said. Apartments with one bedroom that are two years old or older have gained a noticeable presence in the nation’s six special municipalities as well as Hsinchu county and city in the past five years, Evertrust Rehouse Co (永慶房產集團) found, citing data from the government’s real-price transaction platform. In Taipei, apartments with one bedroom accounted for 19 percent of deals last
US CONSCULTANT: The US Department of Commerce’s Ursula Burns is a rarely seen US government consultant to be put forward to sit on the board, nominated as an independent director Taiwan Semiconductor Manufacturing Co (TSMC, 台積電), the world’s largest contract chipmaker, yesterday nominated 10 candidates for its new board of directors, including Ursula Burns from the US Department of Commerce. It is rare that TSMC has nominated a US government consultant to sit on its board. Burns was nominated as one of seven independent directors. She is vice chair of the department’s Advisory Council on Supply Chain Competitiveness. Burns is to stand for election at TSMC’s annual shareholders’ meeting on June 4 along with the rest of the candidates. TSMC chairman Mark Liu (劉德音) was not on the list after in December last