HSBC Scraps Target for Profitability -- WSJ

Fecha : 29/10/2019 @ 02:02
Fuente : Noticias Dow Jones
Emisora : Hsbc Holdings Plc (HSBA)
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HSBC Scraps Target for Profitability -- WSJ

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Earnings fall as CEO sees restructuring ahead with pullback in European operations

By Margot Patrick 

This article is being republished as part of our daily reproduction of articles that also appeared in the U.S. print edition of The Wall Street Journal (October 29, 2019).

LONDON -- HSBC Holdings PLC abandoned 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 said in an interview. on Monday

The bank is already acting on plans to sell its large French retail business.

HSBC shares fell 3% in European trading as analysts said the plans added new risks around timing and execution.

Mr. Quinn said he has dropped the bank's 2020 target to make at least an 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 be cut but said HSBC continues to hire in Hong Kong and mainland China.

HSBC has operations in 65 countries but makes around one-third of its revenue 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 undertaking a global hunt 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 changes come after HSBC recently completed a yearslong restructuring that saw it exit from about 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


(END) Dow Jones Newswires

October 29, 2019 02:47 ET (06:47 GMT)

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