HSBC on Tuesday said first quarter pre-tax profits almost halved as the banking giant is battered by the global coronavirus pandemic while it embarks on a major restructuring.
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“The economic impact of the Covid-19 pandemic on our customers has been the main driver of the change in our financial performance since the turn of the year,” newly confirmed CEO Noel Quinn said in a statement.
The Asia-focused lender has embarked on a huge cost-cutting initiative as it battles multiple uncertainties caused by the grinding US-China trade war, Britain’s departure from the European Union and now the pandemic.
But Covid-19 has thrown a spanner into the works with HSBC on Tuesday confirming many of the redundancies would be put on hold for now “to reduce the uncertainty” many of its employees would face in a decimated jobs sector.
Banks are being hammered by market volatility and the economic slowdown caused by the virus crisis.
But they are also on the receiving end of huge bailouts and support from central banks and regulators.
Quinn is tasked with transforming the sprawling international bank, which spans more than 50 countries but makes the vast majority of its profits in Asia.
In recent years HSBC‘s Asia business has done well – fuelled primarily by China – but Europe and the US have disappointed.
Before the coronavirus went global the bank announced plans to make $4.5 billion in cost cuts by 2022, with restructuring costs of around $6 billion.
Many of the cutbacks will be in the European and US investment banking sectors, while units in more profitable Asia and the Middle East would be bolstered.
The restructuring plans are the most ambitious since 2012 when HSBC was caught up in a Mexican money laundering scandal.
Quinn took over as acting CEO after the shock ouster last August of John Flint. He was finally confirmed as the bank’s head last month.
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