HSBC PLC (LON:HSBA) has posted a smaller-than-expected 35% drop in quarterly profit and flagged an easing in bad debt provisions, citing an expected improvement in the economic outlook for its main markets
Reported pre-tax profit for the Asian-focused lender came in at $3.1bn for the quarter ended September 30, higher than the $2.07bn average of analysts’ forecasts compiled by the bank.
HSBC also said it expected losses from bad loans to be at the lower end of the $8bn to $13bn 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,” it said in the results statement.
The FTSE 100-listed bank revealed as well that it would embark on a transformation of its business model, seeking to switch its main source of income from interest rates to fee-based businesses and also accelerated plans to shrink in size and slash costs further than previously suggested.
The change in approach marks one of the biggest long-term shifts in strategy to date from Europe’s biggest bank, which has long touted its ability to generate interest income from its more than $1.5 trillion in customer deposits.
HSBC has been looking to reduce costs globally and in June resumed plans to cut around 35,000 jobs it had put on ice after the coronavirus outbreak.
The bank also said Tuesday that it will accelerate the transformation of its US business, where it has long struggled to compete with much bigger local players, and will provide an update on the plans with its 2020 full-year results in February next year.
HSBC’s Hong Kong-listed shares rose over 5% in response.