HSBC share price: where next as profits slump after weak performance in Europe and US

In its Q3 results, the bank said its weak performance in its European and US divisions is ‘not acceptable’, prompting the lender to accelerate its restructuring plans for both units.

HSBC unveiled a disappointing set of third quarter results on Monday, with underlying revenues down 2% to $13.3 billion and a 12% decline in pre-tax profits to $5.3 billion – below analysts’ expectations.

The bank blamed its weaker-than-expected performance on lower client activity in global markets, particularly in Europe and the US.

The news drove HSBC’s shares 3% lower on Monday, closing at 598p.

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HSBC plans to overhaul European and US divisions

In the wake of its Q3 results, HSBC said that it plans to restructure its business and said its performance in parts of Europe and the US was ‘not acceptable’.

HSBC’s interim CEO Noel Quinn said that the bank plans to overhaul both divisions which were ‘no longer sufficient’, with the lender looking at ‘accelerating plans to remodel them’.

Restructuring plans could lead to further job losses

Earlier this month, it was reported that HSBC planned to cut up to 10,000 jobs in a bid to reduce operating costs amid challenging market conditions that have squeezed margins and hurt the bank’s bottom line.

Following the bank’s results on Monday, Quinn told Reuters that ‘there is scope throughout the bank to clarify and simplify roles, and to reduce duplication’.

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Growth in Asia unable to offset poor performance globally

HSBC has relied on strong growth in Asia to offset its weaker performance in other regions. However, the world’s local bank continues has seen profits in Asia hampered ongoing US-China trade war and civil unrest in Hong Kong.

‘Parts of our business, especially Asia, held up well in a challenging environment in the third quarter,’ Quinn said. ‘However, in some parts, performance was not acceptable, principally business activities within continental Europe, the non-ring-fenced bank in the UK, and the US.’

In its third quarter, HSBC saw its pre-tax profit in Asia increase by 4% to $4.7 billion.

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