London-based HSBC Bank on Tuesday said that it aims to cut $4.5 billion in costs and scale back 35,000 jobs over the next three years, after announcing that profits had dropped by one-third in 2019.
The move would see a major restructuring of the company's headcount from 235,000 employees to 200,000, HSBC's interim chief executive Noel Quinn was reported as saying by the Financial Times. The paper reported Ewen Stevenson, the bank's chief financial officer, as saying that the cuts would include downsizing the bank's business in Europe and the US.
In 2019, the bank reported an annual profit before tax of $13.35 billion. In 2018, this amount was 19.89 billion. The fall was attributed in the annual report to a rise in operating expenses of "up to 22 per cent due to a goodwill impairment of $7.3 billion."
Quinn has been HSBC’s interim CEO since August 2019, when he took over after John Flint was ousted from the job.
“We are taking decisive action,” wrote Quinn in the bank’s ‘Business Update 2020’.
According to the company’s action plan, the bank will divest over $100 billion worth of assets, mostly by scaling by its divisions.
The bank added that it would suspend share buybacks for 2020 and 2021 given the large level of restructuring expected over the next two years.
The bank, Europe's biggest, has been eyeing emerging markets in Asia where it makes half of its revenue. However, Asia is also where it has seen significant challenges, particularly in protest-filled Hong Kong which was one of its key markets.
HSBC's pre-tax profit from India grew 22 per cent to $1 billion last year, however, making it the fifth most profitable geography for the bank worldwide.
The bank had reported a profit before tax of $825 million in 2018.
The bank added 2,000 employees in the country in 2019, taking the total to 40,000 people, which is at par with its largest market of UK.
HSBC's profit from India was driven by global banking and markets segment which grew 20 per cent to deliver a bottom line of $466 million, according to its annual report for 2019.
As per the report, retail banking, where HSBC has massively consolidated its physical presence, delivered a pre-tax profit of $48 million as against $20 million. Commercial banking profits grew to $181 million from $143 million in India last year.
Pre-tax profits attributable to "corporate centre" were up at $311 million from $275 million, the report said.
The number of customer accounts in India grew to 14,935 at the end of 2019 as against 14,210 in the year-ago period.
With inputs from PTI
