HSBC profits fall in 2019

  •   18/02/2020 - 13h43
  •   HARMANT Adeline

It is thus during the morning of Tuesday, February 18, 2020 that the HSBC group indicated a fall of its annual net profits in 2019 to 5.97 billion dollars, i.e. a loss of 53%. In addition to the publication of these results, the Group also made an announcement concerning its restructuring program, which we will also discuss here in more detail.

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HSBC's restructuring plan after these disappointing results :

In the wake of its announcement of unsatisfactory results in 2019, including a real decline in the Group's net profit, HSBC has also announced the introduction of a new, highly effective, risk management system.s extensive restructuring programme, which will notably implement job cuts with 35,000 positions to be eliminated in three years, which still represents 15% of the company's workforce. It should also be remembered that the group had already cut 4,000 posts last year.

This decision comes at a time when the group has suffered the consequences of the trade war between the USA and China and the demonstrations in Hong Kong in a context of low interest rates.

Commenting on the decision, HSBC's Acting Chief Executive, Noel Quinn, said: 'The Group's performance in 2019 has been strong, but some parts of our business are not producing acceptable returns. We are therefore developing a revised plan to increase returns for investors, create capacity for future investment and build a platform for sustainable growth. We have already started to implement this plan, which my management team and I are committed to executing at the planned pace".

 

Explanations for the fall in the group's profits in 2019 :

One of the explanations for the decline in the Group's earnings in 2019 is the impairment charge of USD 7.3 billion, of which USD 4 billion for the global banking business and USD 2.5 billion for the commercial banking business.

Adjusted Group revenues increased by 5.9% to USD 55.4 billion and adjusted pre-tax income also increased by 5% to USD 22.2 billion, reflecting revenue growth in Retail Banking and Wealth Management, Global Private Banking and CMB.

There was also a 20-point drop in RoTE to 8.4% and a dividend per share of $0.51 paid for 2019 activity. A share buyback is planned in 2020 and 2021 because of the significant cost of the restructuring that is expected to take place during these two years.

It should also be noted that the group has made most of its profits in Asia and we will therefore be wary of the coronavirus which could impact its future results.