HSBC defies dismal European bank earnings to post strongly improved earnings, and profits from its Middle East operations eclipse North America - but the bank warns that up to 30,000 job cuts are on their way
HSBC to cut 30,000 jobs despite big profit
HSBC is to axe 30,000 jobs, three times the number expected, even as Europe's biggest bank revealed bumper profits, making US$5 billion (Dh18.36bn) in its second quarter,
The bank's earnings rose 22.5 per cent on the same period last year, beating analysts' estimates of $3.3bn.
But the good news was tempered for HSBC staff worldwide by the announcement that a tenth of the 295,995-strong workforce face losing their jobs by 2013. In the Mena region the bank currently employs 8,755, in the UAE 68 jobs have already been cut in April.
The cuts come as part of a wider restructuring in the US, Latin America, France, the UK and the Middle East, as the bank plots a course to reduce costs by up to $3.5bn by 2013.
The bank's results were a mark of approval for its global cost-cutting drive and broader restructuring efforts, said Stuart Gulliver, the bank's chief executive.
"I am pleased with these results, which mark a first step in the right direction on what will be a long journey."
Douglas Flint, the bank's chairman, said the results gave confidence to the bank to push ahead with its cost-cutting drive. "The mood in the organisation is upbeat and there is real commitment and enthusiasm to tackle the tasks ahead of us," he said.
Investors appreciated the results, pushing the bank's London-listed stock up 3.75 per cent to 616.8 pence during trading yesterday.
HSBC Middle East reported an increase in profits of 140.9 per cent to $412 million for the second quarter.
The UAE market has been the bank's strongest performer of the year so far in the region. This year, the bank's share of profits from the Middle East have overtaken its North American operations.
The bank reaped the benefits of improved economic growth in the Gulf states where it conducts most of its business in the region, said Simon Cooper, the chief executive of HSBC Middle East and North Africa (Mena).
"Mena remains a crucial region for HSBC," he said. "Overall, these results are very satisfactory, given the instability and market disruption we have seen in the first half in our region and globally."
Profits during the first half from the UAE, Egypt and Saudi Arabia improved strongly compared with a year earlier, with profits from the Emirates more than doubling.
In May, the bank said it would close its global Islamic banking unit, HSBC Amanah, in Qatar following a move by the Qatar Central Bank to separate Sharia-compliant banks from conventional lenders.
The bank also announced it had agreed the sale of 195 US branches in upstate New York. It had earlier moved to wind down or sell its US credit card business.
Earlier this year, the bank pulled out of retail banking business in Russia and made cuts to a number of its Latin American businesses.