HSBC Misses Third-Quarter Profit Expectations -- Update
October 28 2019 - 4:41AM
Dow Jones News
By Margot Patrick
HSBC Holdings PLC abandoned its main financial target and said
it would speed up plans to revamp its U.K., U.S. and European
businesses as tougher market conditions hit its third-quarter
earnings.
Net profit fell 24% in the quarter, to $2.97 billion. A FactSet
poll of analysts had tipped a net profit of $3.96 billion for the
quarter.
Noel Quinn, in the job since August as interim chief executive,
said Monday that the bank's business in Asia held up well in the
quarter despite challenges that included violent antigovernment
protests in Hong Kong and a continuing U.S.-China trade dispute.
But he said previous plans to improve performance in its U.K
investment bank, U.S. unit and continental European operations "are
no longer sufficient."
HSBC shares were down 2.82% in early trading.
Mr. Quinn dropped a target for next year 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 strategic plans and financial targets will be set at full-year
results in February, if not sooner, the bank said.
As a result, HSBC said it expects to take significant charges in
the fourth quarter and beyond, including the possible impairment of
goodwill and restructuring charges.
The bank said Monday it has too much capital tied up in Europe
and in its global banking and markets division, and that returns
are "insufficient" in the U.S. It is planning to sell its large
French retail bank, The Wall Street Journal previously reported. It
also said it would continue to simplify the bank and reduce
costs.
Mr. Quinn replaced former CEO John Flint after the bank's board
decided it needed a leadership change to address worsening economic
conditions.
--Yifan Wang contributed to this article.
Write to Margot Patrick at margot.patrick@wsj.com
(END) Dow Jones Newswires
October 28, 2019 04:26 ET (08:26 GMT)
Copyright (c) 2019 Dow Jones & Company, Inc.
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