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Coronavirus: HSBC profits halved by pandemic fallout Coronavirus: HSBC puts 35,000 job cuts on hold
(about 1 hour later)
HSBC says its first quarter profits have almost halved due to the impact of the coronavirus pandemic. HSBC has paused plans to cut 35,000 jobs, saying it does not want to leave staff unable to find work elsewhere during the coronavirus outbreak.
Pre-tax profit for the first three months of the year came in at $3.2bn (£2.6bn), down from $6.2bn a year ago. The bank announced the cuts in February as part of a massive cost-cutting programme.
The bank increased its expectations of bad loans, which are unlikely to be paid back, to $3bn due to the fallout from Covid-19 and as oil prices slump. But boss Noel Quinn said the "the vast majority" of redundancies would now be put on hold due to the exceptional circumstances.
However, it confirmed it would put plans to axe 35,000 jobs on hold to support staff during the outbreak. It came as HSBC reported a 50% fall in profits linked to the pandemic.
The London-headquartered bank warned that the negative effect of the pandemic on the global economy would mean an increase in the number of bad loans. Pre-tax earnings for the first three months came in at $3.2bn (£2.6bn), down from $6.2bn a year ago.
It also said that there would be sustained pressure on the bank's earnings as customer activity falls and lower central bank interest rates hit profitability. The bank forecast bad loans would rise to $3bn due to customers not being able to repay them during the crisis. It also said earnings were likely to remain under pressure.
The bank also highlighted "a significant charge related to a corporate exposure in Singapore". "The economic impact of the Covid-19 pandemic on our customers has been the main driver of the change in our financial performance," Mr Quinn said.
In February HSBC said it would scale back its headcount from 235,000 to about 200,000 over the next three years. Earlier this year, HSBC said it planned to scale back its headcount from 235,000 to about 200,000 over the next three years.
The move is part of the a restructuring programme as it targets $4.5bn of cost cuts by 2022. The move is part of a restructuring programme which aimed to achieve $4.5bn (£3.6bn) of cost cuts by 2022.
The bank has now confirmed that it was pushing ahead with those restructuring plans but had halted job cuts to avoid disruption and leaving staff unable to find work elsewhere due to the coronavirus outbreak. Simon French, chief economist at Panmure Gordon, told the BBC's Today programme the plan to delay job cuts would provoke mixed feelings.
'Best bit of news'
Simon French, chief economist at Panmure Gordon, told the BBC's Today programme that this part of the earnings report is likely to be greeted quite differently by HSBC's workers and investors.
"This is probably the best bit of news in the whole results for employees," he said."This is probably the best bit of news in the whole results for employees," he said.
"While it's good news for employees it isn't necessarily good news for shareholders and a return to higher profitability," he added. "But while it's good news for employees it isn't necessarily good news for shareholders and a return to higher profitability."
Separately, in a note to employees earlier this month HSBC's chief executive Noel Quinn said he would donate a quarter of his base salary for the next six months to charity, which works out at £160,000. He will not take his annual cash bonus, which would have been up to £1.2m. Forgoing bonuses
Chief financial officer Ewen Stevenson said he would do the same, donating £93,000 and forgoing £706,000, while chairman Mark Tucker will donate his entire 2020 fee to charity, about £1.5m. Separately, in a note to employees earlier this month, HSBC's chief executive Noel Quinn said he would donate a quarter of his base salary, about £160,000, for the next six months to charity.
He will also not take his annual cash bonus, which would have been up to £1.2m.
Chief financial officer Ewen Stevenson said he would take similar action, donating £93,000 and forgoing £706,000, while chairman Mark Tucker will donate his entire 2020 fee to charity, about £1.5m.
It came as senior executives and board members at other major UK banks, including RBS and Lloyds, agreed to give up their bonuses for this year.It came as senior executives and board members at other major UK banks, including RBS and Lloyds, agreed to give up their bonuses for this year.
The announcements were in response to calls from the Bank of England to restrict bonuses. The announcements were in response to calls from the Bank of England to restrict bonuses during the pandemic.