Shaken at the end of October after a review of its forecasts, HSBC is trying to stabilize on the Wall Street, while the retail bank had reported a decline in its quarterly profit more than expected while renouncing a profitability target set for 2020 and suggesting new costly restructuring measures.
The prospect of a new restructuring within the institution, which makes most of its profits in Asia, comes in a still difficult international context, against the backdrop of a trade war between China and the United States. Hong Kong, the Brexit uncertainties and the (very) low rates. Still, some uncertainties could soon be lifted, especially with regard to Brexit and international trade. On the broker side, Berenberg downgraded the stock to sell.
HSBC, which sacked its chief executive John Flint in early August, 18 months after the appointment, reported a three-month profit at the end of September, down 18 percent to $4.8 billion versus a consensus of 5.3 billion. US retail banking business has accumulated $189 million in losses in the first nine months of the year. Back on October 28, the bank released quarterly results for the third quarter with profit dropping 24% to $3 billion compared to the prior-year quarter, while reported revenue decreased 3% to $13.4 billion. In Asia, earnings before taxes increased 4% to $4.7 billion.
Noel Quinn, interim CEO of HSBC, described the performance of European and US operations as “unacceptable” last month. He added that investors may have to wait until next year to learn more about how he intends to “reshape” the first European bank in terms of assets.
HSBC’s management pointed out that it would not achieve its target of an 11% return on equity (ROE) set for 2020 because these prospects are considered “more difficult” than in the start of the year. He also said loan losses, which include a charge for Hong Kong’s economic outlook, increased by $400 million in the third quarter.