HSBC targets job losses and Asia focus as annual profits fall 34%

23 February 2021, 05:39 | Updated: 23 February 2021, 11:02

HSBC says it is to cut jobs to save cash and focus on building earnings in Asia after reporting a 34% drop in annual pre-tax profits to £6.2bn during 2020.

Europe's largest bank revealed a revised strategy including a greater emphasis on wealth management in Asia, where it makes the bulk of its profits, to mitigate its exposure to record low interest rates in retail and business banking in Europe.

UK-headquartered HSBC, which cut 11,000 jobs in 2020, said it would continue to make savings this year as it cut some staff and moved others from Europe and the US to assist in the Asia push.

The group did not put a figure on the total number of job losses it was targeting but said that back office functions would account for the bulk of the roles affected.

HSBC later admitted it expected to cut a third of the 7,000 roles in its finance department as part of the process but over several years and would halve its current global office space as more people are able to work from home as a result of coronavirus restrictions.

The company said it would retain its headquarters in London's Canary Wharf but relinquish its other major office sites in the city.

It revealed only last month that a further 82 UK branches were to be closed as more of its business shifts online.

HSBC signalled that loan losses in Europe as a result of the COVID-19 pandemic were a key driver of the shift towards Asia - with the move being warmly welcomed by shareholders as its Hong Kong-traded stock was up to 6% higher.

The mood was aided by a return to dividend payments - the first since October 2019 after the Bank of England blocked all big lenders from paying dividends or buying back shares in 2020 to conserve capital.

It revealed a cash dividend of 11p-per-share for 2020 and said it was considering an interim dividend for the current year.

However, London-listed shares were down by almost 1% as weakened future profit targets came in to sharper focus.

Chief executive Noel Quinn said the company's mandate in 2020 had been to "provide stability in a highly unstable environment for our customers, communities and colleagues".

He added: "I believe we achieved that in spite of the many challenges presented by the COVID-19 pandemic and heightened geopolitical uncertainty.

"Our people delivered an exceptional level of support for our customers in very tough circumstances, while our strong balance sheet and liquidity gave reassurance to those who rely on us.

"We achieved this while delivering a solid financial performance in the context of the pandemic - particularly in Asia - and laying firm foundations for our future growth."