HSBC accelerates 35,000 job cuts amid Covid-19 profit plunge

HSBC is to accelerate plans to cut 35,000 jobs globally after the Covid-19 crisis forced the bank to put aside another $3.8bn (£2.9bn) to cover bad debts.

The London-headquartered bank announced on Monday that pretax profits plunged more than 80% to $1.1bn (£842m) in the second quarter, down from $6.2bn (£4.7bn) during the same period last year. That is far worse than the $2.5bn that analysts had expected.

The bank, which makes most of its profits in China and Hong Kong, reported a $3.8bn loan loss charge, up from the $555m it put aside for bad debts last year. Analysts had expected the bank to take a $2.7bn provision.

HSBC, which already took a $3bn charge in the first quarter, expects loan loss charges linked to the Covid-19 crisis to reach $8bn-$13bn by the end of 2020. It said the estimate reflected the deterioration of the economic outlook and its poor performance in the second quarter.

It warned that the outlook would depend on the path of the pandemic and rising geopolitical tensions that could affect key markets including Hong Kong and the UK.

HSBC has come under fire over its support for China’s controversial security laws in Hong Kong and also been attacked by Beijing over its alleged role in the arrest of a Huawei executive.

“Current tensions between China and the US inevitably create challenging situations for an organisation with HSBC’s footprint,” the HSBC chief executive, Noel Quinn, said. “We will face any political challenges that arise with a focus on the long-term needs of our customers and the best interests of our investors.”

He said the lender would ramp up cost-cutting plans announced in February, which were originally estimated to involve 35,000 job cuts across its global business.

“Having paused parts of our transformation programme in response to the Covid-19 outbreak, we now intend to accelerate implementation of the plans we announced in February,” Quinn said.

“We are also looking at what additional actions we need to take in light of the new economic environment to make HSBC a stronger and more sustainable business.”