HSBC 2019 pre-tax profits drop by a third to $13.3b

by AFP/ pic by AFP

HONG KONG – HSBC said Tuesday its 2019 pre-tax profits fell by a third on year to $13.3 billion as interim chief Noel Quinn warned that the global banking giant was “not delivering acceptable returns”.

The Asia-focused lender has been trying to lower costs as it faces a multitude of uncertainties caused by the grinding US-China trade war, Britain’s departure from the European Union and now the deadly new coronavirus in China.

Quinn, who took over as acting CEO after the shock ouster in August of John Flint, has been tasked with overhauling the sprawling international bank, which spans more than 50 countries but makes the vast majority of its profit in Asia.

HSBC said a 33 percent drop in annual profits last year compared to the $19.89 billion it made in 2018 was largely down to a $7.3 billion goodwill impairment related to its investment and commercial banking businesses in Europe.

It also reported a loss before tax of $3.9 billion in the fourth quarter of 2019.

But the bank also gave fresh details on plans to overhaul its more underperforming areas, particularly its businesses in the United States and Europe.

“The Group’s 2019 performance was resilient, however parts of our business are not delivering acceptable returns,” Quinn said.

Last year HSBC announced plans to axe some 4,700 jobs, primarily outside of its more profitable businesses within the Greater China region.

Tuesday’s statement suggests further job losses are likely in the coming months.

In the US, the bank said it planned to reduce its branch network by around 30 percent, consolidate back and middle office activities and lower operating expenses by 10-15 percent.

“We also intend to reduce our sales and trading and equity research in Europe and transition our structured products capabilities from the UK to Asia,” the bank added.