HSBC Profits Plummet by 65%, Accelerating Job Cuts
Falling far below analysts’ expectations, HSBC has struggled as the global pandemic has driven down interest rates and turned loans bad.
HSBC’s profits fell to $4.3 billion for the first half of 2020, dropping from $12.4 billion during the same period last year.
The British multinational bank also confirmed on Monday that provisions set aside for potential loan losses rose to $3.8 billion during the second quarter – about $1 billion higher than analysts predicted – and revised its forecast for loan loss provisions for the full year, raising the likely figure to between $8 billion and $13 billion.
Following the announcement, HSBC’s shares fell 4.3%, reaching the bottom of the FTSE 100 and dragging the index down to its lower level since mid-May. The bank also confirmed that it would accelerate its February-announced plans to cut 35,000 jobs worldwide in an effort to save costs.
The news comes as HSBC grapples with a major restructuring of its international banking operations, while also coming under fire for its support of China’s new national security law in Hong Kong.
In a statement on Monday, HSBC’s group chief executive Noel Quinn acknowledged the bank’s precarious political situation in a statement on Monday.
“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.”
Quinn noted the continuing threat posed by the COVID-19 pandemic: “We are also looking at what additional actions we need to take in light of the new economic environment to make HSBC a stronger and more sustainable business.”