Advertisement

HSBC identifies further transformative cost cuts

HSBC Chief Executive Stuart Gulliver has notified of further considerable cost cutting plans as the bank becomes "simpler and easier to manage" after shedding a swathe of underperforming businesses.

HSBC Chief Executive Stuart Gulliver has notified of further considerable cost cutting plans as the bank becomes "simpler and easier to manage" after shedding a swathe of underperforming businesses.

In an investor update at its London headquarters, the banking group notified of "significant execution progress" in its new strategy, with the disposal of 52 non-strategic or underperforming businesses as part of $4.0bn of annualised sustainable cost savings.

Advertisement - Article continues below

Gulliver, who re-affirmed the targeted return on equity of between 12% and 15%, crucially also identified a further $2-3bn additional costs savings, with the aim of increasing the cost-efficiency ratio to the "mid-50s", both of which were ahead of market expectations.

"We have transformed HSBC in the first phase of the execution of our strategy," he said.

"HSBC is now simpler, easier to manage and ready to take advantage of growth opportunities," he added, pointing to the generation of double-digit loan growth in 15 priority markets.

Addressing regulatory and public concerns, Gulliver pledged that the bank would invest in world-leading risk and compliance capabilities and de-risk its operations in higher risk locations.

The bank's strategy remains "unchanged" and the priorities for the next phase between 2014 and 2016 are stated as growing both the business and dividends, implementing global standards, and streamlining processes and procedures.

He said: "Our 22 home and priority markets are expected to account for approximately 58% of addressable total banking revenue growth globally to 2020 [according to McKinsey & Co]. Over the next three years we will focus discretionary growth of risk-weighted assets in our priority faster growing markets and Commercial Banking."

Gulliver said the board could seek to "neutralise the effects of the scrip dividend" if capital levels appeared to be at risk.

"HSBC has a distinctive position in the new environment for the banking industry," he concluded "Taken together, we are confident that these measures will deliver consistent and superior financial results and move us closer to achieving our ambition of being the world's leading international bank."

OH

Advertisement
Advertisement

Recommended

Visit/investments/investment-strategy/601044/broker-safety-your-questions-answered
Investment strategy

Broker safety – your questions answered

Cris Sholto Heaton answers more of your questions about the safety of stockbroker accounts
25 Mar 2020
Visit/investments/investment-strategy/600861/how-demographics-affects-stock-valuations
Investment strategy

How demographics affects stock valuations

New research suggests that stock and bond valuations are driven by the age of the population – at least in the US.
24 Feb 2020
Visit/investments/stocks-and-shares/600863/sirius-minerals-anglo-american-takeover
Stocks and shares

Do you own shares in Sirius Minerals? Here’s what you need to do now

Mining giant Anglo American has proposed a cash takeover of Yorkshire-based minnow Sirius Minerals. Unhappy shareholders must decide whether to accept…
20 Feb 2020
Visit/investments/stockmarkets/600634/why-investors-should-be-cautiously-bullish-for-2020
Stockmarkets

Why investors should be “cautiously bullish” for 2020

Analysts have been out in force making rosy predictions for stockmarkets in 2020, but while there is certainly a case for optimism, investors should r…
17 Jan 2020

Most Popular

Visit/investments/property/601606/house-prices-crash-uk-property-prices-falling-where-next
Property

House price crash: UK property prices are falling – so where next?

With UK property prices falling for the first time in eight years, are we about to see a house price crash? John Stepek looks at what’s behind the sli…
2 Jul 2020
Visit/economy/inflation/601584/the-end-of-the-bond-bull-market-and-the-return-of-inflation
Inflation

The end of the bond bull market and the return of inflation

Central bank stimulus, surging post-lockdown demand and the end of the 40-year bond bull market. It all points to inflation, says John Stepek. Here’s …
30 Jun 2020
Visit/investments/stockmarkets/601611/nasdaq-all-time-high-markets-and-the-real-economy
Stockmarkets

How can markets hit new record highs when the economy is in such a mess?

Despite the world being in the midst of a global pandemic, America's Nasdaq stock index just hit an all-time high. And it's not the only index on a bu…
3 Jul 2020