HSBC Misses Third-Quarter Profit Expectations -- 3rd Update
28 Octubre 2019 - 8:07AM
Noticias Dow Jones
By Margot Patrick
LONDON -- HSBC Holdings PLC dropped one of its main financial
targets for 2020 and said it would embark on a new round of
restructuring as tougher market conditions hit its third-quarter
earnings.
Net profit fell 24% in the quarter, to $2.97 billion, the bank
said Monday. A FactSet poll of analysts had expected a net profit
of $3.96 billion for the quarter.
Noel Quinn, who has been interim chief executive since August,
said Monday that the bank needs to simplify its structure further
and revamp its operations in the U.K., Europe and the U.S. That
would mean pulling back in commercial banking and investment
banking in the U.K. and Europe and investing more in higher-growth
areas such as Asia, the Middle East, Mexico and Canada, he told The
Wall Street Journal on Monday.
The Journal previously reported that the bank is already acting
on plans to sell its large French retail business.
HSBC shares fell 4.2% in European trading -- as some analysts
said the plans added new risks around timing and execution, putting
it on track for its worst earnings' day decline since Feb. 2017 --
when the stock fell 6.5%.
Mr. Quinn said he has dropped the bank's 2020 target to make an
at least 11% return on tangible equity, and said plans are being
accelerated to "remodel" the lagging units and free up capital to
put elsewhere. New financial targets will be set at full-year
results in February, if not sooner.
As a result, HSBC said it expects to take significant charges in
the fourth quarter and beyond, including the possible impairment of
goodwill and severance costs for departing staff.
Mr. Quinn didn't say how many of the bank's 238,000 jobs might
go, but noted that HSBC continues to hire staff in Hong Kong and
mainland China.
HSBC has operations in 65 countries but makes around one-third
of its revenues in Hong Kong, where it was founded in 1865. It aims
to continue its dominance in that banking market, and, over time,
grab market share from Chinese banks on the mainland.
Mr. Quinn replaced former CEO John Flint after the bank's board
decided it needed a leadership change to address worsening economic
conditions. The board is now undertaking a global headhunt for a
new CEO and Mr. Quinn said Monday that he hopes to take the job
permanently.
John Cronin, a banking analyst at Goodbody Stockbrokers, said
Mr. Quinn's handling of the job so far has been impressive, but he
expects the bank's board will ultimately bring in an outsider to be
CEO -- breaking with 150 years of tradition. The search is being
led by Chairman Mark Tucker, who has sought to introduce fresh
thinking at the bank.
HSBC has long had a reputation for being slow-moving and
bureaucratic. On Monday, Mr. Quinn said the bank is still overly
complex and that head count could come down in management and
support roles across the group.
The latest rejig comes after HSBC recently completed a yearslong
restructuring that saw it exit around 20 countries and dozens of
businesses. Mr. Quinn said the earlier reorganization was more of a
"risk management" program, while the current plans would help free
up capital to invest in technology and adapt quickly to changes in
the bank's markets.
--Yifan Wang contributed to this article.
Write to Margot Patrick at margot.patrick@wsj.com
(END) Dow Jones Newswires
October 28, 2019 09:52 ET (13:52 GMT)
Copyright (c) 2019 Dow Jones & Company, Inc.
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