HSBC profits plunged more than 82 per cent as the bank warned £10billion worth of loans could turn sour this year due to the coronavirus pandemic.
The London-headquartered lender, which makes most of its money in Asia, said pre-tax profits slid to just £824m in the three months to June 30, down from £4.7billion over the same period last year.
This was much worse than the £1.9billion expected by analysts, and caused shares to slump 2.9 per cent, or 9.95p, to 332.25p – their lowest level since March 2009 during the depths of the last financial crisis.
HSBC boss Noel Quinn said he was planning to ‘accelerate’ his shake-up of the bank in a cost-cutting drive which was already set to see 35,000 jobs axed globally by 2022.
The brutal restructuring was initially put on hold during the pandemic, but chief financial officer Ewen Stevenson confirmed yesterday that 3,800 jobs had been cut since the beginning of the year.
And in a worrying sign for office landlords and business districts around the world, Quinn added that the bank may need less office space in future as the pandemic pushed more staff to work from home.
He said: ‘I do think there’s potential over the medium term to reflect on different ways of working, allowing people greater flexibility to work from home or in the office.’
Prime Minister Boris Johnson has urged workers to return to their offices where possible as lockdown eases, to bring life to deserted business hotspots.
But the majority of staff at HSBC and other major financial institutions have been working at home throughout the pandemic, and many firms are now wondering whether they need all of their towering skyscrapers in costly locations such as Canary Wharf and London’s Square Mile.
It had already set aside £2.3billion to cover bad loans in the first three months of 2020, and ramped this up to £5.3billion in June as the extent of the damage began to emerge.
HSBC warned the cost over the full year could be as high as £10billion. Its outlook for the UK was gloomy, as around £1billion of the expected losses were linked to the country. On top of the coronavirus troubles, HSBC has been dealing with a flare-up in tensions between the US and China.
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