Oct 28, 2019

HSBC interim CEO to remodel’ bank as profit falls 24%

The interim chief executive of HSBC has announced plans to "Remodel" large parts of the bank as the lender reported a 24 per cent decline in third-quarter net profit and abandoned its main financial target. Mr Quinn said he had been working on a new plan for HSBC "For a few weeks", which involves reducing the amount of capital allocated to low-returning parts of the bank in Europe and the US. HSBC generated 93.6 per cent of its pre-tax profits in Asia during the third quarter, but has $426bn of assets adjusted for risk - about 50 per cent of the total - allocated to Europe and the US. Mr Quinn declined to give details of the restructuring plan, which will be unveiled at or before the bank's fourth-quarter results announcement in February, but warned it "Could take up to two years" to complete the turnround. The bank abandoned its main profitability target - to generate a return on tangible equity of more than 11 per cent next year - blaming a "Challenging" environment. The Asia-focused lender reported third-quarter net profit had fallen 24 per cent to $2.97bn, about 14 per cent below analysts' forecasts. The bank posted a return on tangible equity of 6.4 per cent for the third quarter, versus 10.9 per cent a year ago.

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