HSBC is considering speeding up plans to cut 35,000 jobs around the world because the international health crisis is forcing it to allocate another $3.8 billion (2.9 billion pounds) to take care of bad debts.
London-based HSBC on Monday said its pretax earnings fell more than 80 percent to $1.1 billion in the second quarter from $6.2 billion in the same period in 2019. Market observers had predicted earnings of $2.5 billion.
Roughly $1.5 billion of the anticipated losses from credits were connected to the bank's business in the U.K. The region may be particularly affected by the coronavirus pandemic. HSBC, which derives a large chunk of its revenue from China and Hong Kong, posted a $3.8 billion loan-loss charge compared with the $2.6 billion estimated by analysts.
The bank will "fast-track" an earlier reorganization which included ending the employment of 35,000 workers, chief executive officer Noel Quinn said. The bank's operating environment has changed dramatically since the start of 2020, he said. HSBC is looking at other ways to bolster its business.
Europe's largest lender said it had been heavily affected by falling interest rates, the damage brought about by the virus and political friction between China and the U.S. Their trade war and doubts over Brexit will continue to hamper the bank's performance, HSBC stated.
Hong Kong-listed shares of HSBC Holdings were down 4.46 percent Monday after news of the job cuts and have fallen more than 40 percent so far this year. The bank halted plans for job cuts when the pandemic started but the redundancy program will now push through at a more rapid pace, HSBC said.
HSBC warned estimated credit losses for the current year could reach as much as $13 billion - worse than earlier projections considering the stagnation in consensus economic outlook. "We'll face any challenges that arise with a focus on the long-term needs of our customers and best interests of our investors," Michelle Toh of CNN Business quoted Quinn as saying.
