HSBC Annual Report: Job Cut Warning After Profits Loss

Huge drop in profits lead to a change in direction.

February 23, 2021
HSBC Annual Report: Job Cut Warning After Profits Loss
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Ian Lewis

Written By

Ian Lewis

 

HSBC has warned that job cuts are likely following the latest set of annual profits were announced, with a pre-tax drop of 34 percent to £6.2billion during 2020.

This means that adjusted profit dropped 76 percent compared to the prior year, and adjusted revenue fell 8 percent from £39billion to £35.8billion. As part of the announcement, HSBC has confirmed that it will refocus efforts on its Asia wealth management, which was the source of most of the profits the bank earned.

HSBC State Of Play

HSBC remains the largest bank in Europe and has its headquarters in the UK. Last year 11,000 jobs were cut from the business, and the latest announcements make clear that more savings are needed, including transferring some roles to Asia and making others redundant.

The roles to be made redundant are expected to come from back offices including the finance department, and should take place over several years rather than being an immediate shock.

At the same time, the bank plans to cut its office space in half across the world, as more people opt to work from home following the coronavirus pandemic. It will keep its main headquarters in Canary Wharf but other major office sites in London will be closed down.

London stock has dropped by around one percent since the announcement, but Hong Kong-listed stock has jumped by six percent following the news that the bank will be focusing more on the Asian market.

HSBC Chief Executive said that the bank had a mandate to “provide stability in a highly unstable environment for our customers, communities and colleagues”.

I believe we achieved that in spite of the many challenges presented by the COVID-19 pandemic and heightened geopolitical uncertainty.

Our people delivered an exceptional level of support for our customers in very tough circumstances, while our strong balance sheet and liquidity gave reassurance to those who rely on us.

We achieved this while delivering a solid financial performance in the context of the pandemic — particularly in Asia — and laying firm foundations for our future growth.

Impact Of Coronavirus Evident

HSBC have suggested that loan losses in Europe, as a result of the financial impact of COVID-19 on borrowers, are the main driver behind the losses and the intention to re-focus on Asia at this time.

Last month, HSBC announced that 82 branches in the UK would close, as a result of more people transitioning to online banking during the pandemic.

The bank also announced that a dividend will be paid, following the block in 2020 to preserve capital. An 11p-per-share dividend has been announced, along with the intention to provide an interim dividend for 2021.

Right now the bank is walking a tightrope between being seen to uphold new controversial laws imposed by Beijing and not provoking a retail consumer backlash in Hong Kong which could cause significant damage financially and in terms of its reputation.

Hargreaves Lansdown analyst, Susannah Streeter

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About HSBC Bank HSBC is a British banking and financial services company. It is the largest bank in Europe and the seventh largest bank in the world. The bank originated in Hong Kong...
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