Europe’s biggest bank by asset, HSBC accelerates restructuring plan after posting 35% drop in Q3 profits

On Tuesday, in a statement HSBC Holdings PLC said, it plans on accelerating its restructuring plans after it posted a 35% drop in quarterly profits and flagged an easing in its provisions for bad debts citing an expected improvements in the economic outlook in its main markets.

HSBC, Europe’s biggest bank by asset, reported a pretax profit of $3.1 billion for the quarter ended September 30, down from $4.8 billion in the same period a year earlier. Its profits however was higher than the $2.07 billion average of analysts’ estimates compiled by the bank.

In a statement the Asia-focused bank said, it expected losses from bad loans to be at the lower end of the $8 billion to $ 13 billion range it set out earlier this year.

“This latest guidance, which continues to be subject to a high degree of uncertainty due to Covid-19 and geopolitical tensions, assumes that the likelihood of further significant deterioration in the current economic outlook is low,” said HSBC.

Faced with reduced options to bolster revenue streams, HSBC said it is looking to reduce costs globally. Earlier this year in June it said it plans to cut nearly 35,000 jobs, but has put the plan on hold following the coronavirus-induced COVID-19 outbreak.

Other measures in its global restructuring drive includes divesting its French business, which it may have to sell at a huge loss.

The bank has already stopped paying dividends earlier this year at the request of regulators. It said, it would communicate on a revised dividend policy in February 2021. Investors and analysts worry that the bank could cut payouts in the long run.

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