HSBC saw its profit before tax drop by 33%, to $13.3bn, in 2019 according to its results.
Reported revenue was up 4% but reported operating expenses were up 22%. In addition, reported profit attributable to ordinary shareholders dropped 53% to $6bn.
For Q4 2019, there was a loss before tax of $3.9bn, largely attributed to a goodwill impairment of $7.3bn.
In 2020, the group hopes to improve its returns by 2022. To achieve this, it aims to:
- Reduce gross risk-weighted assets by $100bn by the end of 2022;
- Reduce adjusted cost base, and
- RoTE in the range of 10-12% in 2022.
Restructuring costs are expected to be approximately $6bn. AS a part of this, 35,000 jobs are expected to be axed between now and 2022, according to Reuters. This is close to 15% of its 235,000 strong workforce.
HSBC Private Bank 2019 results
Global Private Banking for HSBC attracted $23bn of net new money and increased adjusted revenue by 5%. Profit before tax was $402m, a 19% rise, largely hindered by operating expenses of $1,424m.
The global bank plans to combine retail banking and wealth management with global private banking.
Noel Quinn, group chief executive, said: “The Group’s 2019 performance was resilient, however parts of our business are not delivering acceptable returns. We are therefore outlining a revised plan to increase returns for investors, create the capacity for future investment, and build a platform for sustainable growth. We have already begun to implement this plan, which my management team and I are committed to executing at pace.”
HSBC’s search for a permanent group chief executive continues and it expects to make an appointment within the 6 to 12 months previously announced.
Mark Tucker, group chairman, added in a statement: “At the time of our interim results, I said that the external environment was becoming increasingly complex and challenging. As our 2019 results demonstrate, this has proven to be the case.
“An impairment of historical goodwill caused our reported profit before tax to fall by 33%, but the strength and resilience of our business model delivered an adjusted profit before tax of $22.2bn, up 5%. Retail Banking and Wealth Management, Commercial Banking and Global Private Banking performed well, while our leading transaction banking franchise again demonstrated the effectiveness of our global network. This, alongside the Group’s capital strength, has given the Board the confidence to approve an unchanged dividend of $0.51 for 2019.”
Ian Pollard, SVP EMEA of digital transformation company Signavio, said: “The organisation must continue to innovate and accelerate plans to improve digital performance. When measured against disruptors with customer-centric business models, there is a significant gap for banks that do not excel in the area of understanding these customer pain points. The winners will be the ones who are more data driven in ‘demystifying’ what their customers want and who have a solid grasp of the processes that have the greatest impact on them.”