HSBC share price: what’s the outlook for 2020?

The last 12 months have been a challenging for HSBC with its share price falling more than 7%, with the world’s local bank looking to cut costs and overhaul its investment banking unit in 2020.

HSBC has had a tough 12 months, with its performance reflected in its share price, falling more than 7% over the period. HSBC is trading at £5.90 a share as of 11:15 GMT on Tuesday.

Since August last year, the bank has been without a permanent chief executive, though HSBC veteran Noel Quinn, who has served as served as interim CEO, is expected to be appointed to the role in the bank's annual results on February 18.

As interim CEO, Quinn has looked to reduce costs, unveiling plans to cut around 10,000 jobs in October, with the bank expected to announce further job cuts in its annual results next month.

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Challenging times for HSBC

The banking sector is under pressure from a prolonged period of low interest rates and ongoing political uncertainty. HSBC’s strong presence in Asia has meant it has been affected by protests in Hong Kong and escalating trade tensions between the US and China.

However, in its third quarter its Asia business held up well, though its activities in Europe and the US have struggled, prompting the bank’s management to ‘remodel’ those units.

‘Parts of our business, especially Asia, held up well in a challenging environment in the third quarter,’ Quinn said in its Q3 results in October. ‘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.’

‘Our previous plans are no longer sufficient to improve performance for these businesses, given the softer outlook for revenue growth. We are therefore accelerating plans to remodel them, and move capital into higher growth and return opportunities,’ he added.

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HSBC’s investment bank struggles

Profits at the bank fell by 25% to $3 billion in the three months to September, driven by a disappointing performance from its global investment bank, with the unit spending more money than it managed to bring in.

In fact, the lender has struggled to keep pace with its peers, with its investment bank unable compete with US rivals like Morgan Stanley, Citi and Goldman Sachs.


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