Cost-cutting sees HSBC third-quarter profits surge 32% to £3.95bn

Published: Monday 2nd November 2015 by The News Editor

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Banking giant HSBC has surprised analysts by posting pre-tax profits of 6.1 billion US dollars (£3.95 billion) for the three months to September.

The figure for the third quarter beat forecasts of 5.2 billion US dollars (£3.4 billion).

It means profits are up 32% compared with the same time last year.

The bank said it was aided by ongoing cost-cutting plans as well as lower outlays for regulatory fines. HSBC said these regulatory outlays were 1.4 billion US dollars (£910 million) lower than the third quarter of 2014.

Chief executive Stuart Gulliver said: “Our cost-reduction measures are beginning to have an impact on our cost base.

“There is more to achieve on costs and we expect the measures we have already taken to have a further impact in the fourth quarter.”

While profits were up sharply, overall revenue dipped 4% to 14 billion US dollars, which Mr Gulliver attributed to the stock market correction in Asia.

“Despite slowing growth in the mainland Chinese economy and market volatility in Asia, there has been no visible impact on our Asian credit quality,” he added.

Shares in the bank dipped more than 1% after the results were announced.

Earlier this month HSBC imposed a 10% pay cut on its contractors and asked them to take two weeks’ unpaid holiday, as part of its cost-cutting measures.

The move is centred on the lender’s global banking and markets investment banking division based in London, and is expected to affect hundreds of workers, from IT staff to analysts and others on fixed-term contracts.

It has also revealed plans to cut 50,000 jobs globally over the next two years.

The bank said the moves are aimed at saving up to 5 billion US dollars (£3.3 billion) by the end of 2017.

HSBC is expected to decide whether to move its headquarters out of the UK by the end of this year at the earliest, with Hong Kong seen as the most likely alternative.

The bank is pressing ahead with measures to relocate the head office of its UK retail banking operations from London to Birmingham by 2018 ahead of new ring-fencing rules separating this part of the group from its investment arm. This part of the bank will hold 22,000 UK staff.

Published: Monday 2nd November 2015 by The News Editor

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