HSBC, which is currently in the midst of a 35,000-redundancy programme, is looking to ramp up its overhaul with plans for more cost cuts as its Q3 2020 profit plunged 36%.
The Asia-focused lender is now shifting its focus from interest-rate focused business lines to fee generating businesses, with plans to exceed its FY22 target of $100bn of gross RWA reductions and $4.5bn gross cost savings.
It also eyes continued digitalisation along with further growth in Asia and looks to distribute a conservative dividend when possible.
HSBC CEO Noel Quinn said: “We also intend to increase our rate of investment in Asia, particularly in wealth, the Greater Bay Area, south Asia, trade finance and sustainable finance.
“The Group’s capital and liquidity ratios strengthened further in the quarter despite the challenging economic conditions.
“A decision on whether to pay a dividend for the 2020 financial year will depend on economic conditions in early 2021, and be subject to regulatory consultation.”
HSBC intends to lower its 2022 annual cost base beyond its original $31bn target. Plans are on to further lower RWAs in its Global Banking and Markets (GBM) arm.
The bank will maintain investment in its focus areas while exceeding its target to lower RWAs by $100bn in low-returning areas.
More resources will be dedicated to areas of competitive advantage and higher returns.
The bank is also looking to speed up the transformation of its US business, where RWAs reduced 8% on a year-on-year basis in Q3 20.
It would unveil more details on the transformation in its 2020 full-year results, scheduled to be released in February 2021.
The group’s reported pre-tax profit was $3.1bn in the three months to September 2020, versus $4.8bn in the prior year.
Adjusted pretax profit slumped 21% to $4.3bn, beating the analyst forecast.
The impact of lower interest rates resulted in an 11% year-on-year decrease in revenues to $11.9bn from $13.3bn.
The performance was tempered by reduction in operating expenses driven by cost-saving measures as well as lower performance-related pay accrual. Expenses dipped 1% on a reported basis and 3% on an adjusted basis.
The group’s CET1 ratio, a key measure of strength, rose to 15.6% at the end of September 2020 from 15% at Q2 20 despite the Covid-19 turmoil.
At HSBC’s wealth and personal banking unit, adjusted pre-tax profit decreased to $1.42bn from $1.97bn.
HSBC is undergoing a massive restructure recently, which includes the integration of its retail banking, wealth management, and global private banking units.
The combined entity has $1.4trn in assets.
The bank has recently drawn flak for backing the controversial national security law in Hong Kong imposed by Beijing.