HSBC Misses Third-Quarter Profit Expectations -- 2nd Update
October 28 2019 - 8:44AM
Dow Jones News
By Margot Patrick
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 tipped 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% 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 an
at least 11% return on tangible equity, and said 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.
Mr. Quinn replaced former CEO John Flint after the bank's board
decided it needed a leadership change to address worsening economic
conditions. The bank's board is undertaking a global headhunt for a
new CEO and Mr. Quinn said Monday that he hopes to take the job
permanently.
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 08:29 ET (12:29 GMT)
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