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HSBC to accelerate restructuring as Q3 profits drop 36% to $3 billion
HSBC is accelerating its restructuring plan after pre-tax profit plunged 36 percent year-on-year in the third quarter to $3.1 billion, and revenue dropped 11 percent from the same period last year.
Among the bank's problems were ultra-low interest rates and geopolitical tensions on the economic impact of the coronavirus pandemic.
According to HSBC CEO Noel Quinn, they would now move to accelerate its reorganization, including roughly 35,000 job cuts and a dramatic overhaul of its business.
While the remodel of its units in the US and Europe were on track, HSBC needs to cut more costs and dispose of more assets than originally expected.
HSBC announced in February that it would trim $100 billion in assets through 2022 but now foresees it exceeding that amount.
The bank also needs to transform its business model from being interest-rate sensitive towards fee-generating and further reducing operating costs.
Central banks globally have cut interest rates to historic lows due to the pandemic's adverse effect on the economy.
The US Federal Reserve has also committed to retaining rates near zero for the next few years.
HSBC had pledged to shift more resources, particularly in South Asia and China's Greater Bay Area.
Asia, where the bank makes most of its profits, is rebounding strongly, led by a pick-up in trade and manufacturing.
HSBC's areas of focus will include trade finance, sustainable finance, and wealth management.