HSBC just reported a surprise loss in the fourth quarter — even though it had been actively paring back on costs and cutting jobs for years in order to save cash.
In fact, Europe’s largest bank confirmed in a statement that income from lending fell and loan impairment charges leading to a loss in the fourth quarter.
It’s boss is even taking a pay cut.
‘Targeted investment, prudent lending and our diversified, universal banking business model helped us achieve revenue growth in a difficult market environment, whilst also reducing risk-weighted assets. Strict cost management slowed cost growth and our cautious approach to credit helped keep loan impairment charges low,” said Stuart Gulliver, group CEO at HSBC in the results statement.
“We made a good start in implementing the plans that we announced at our Investor Update in June. Delivering against these plans remains our primary focus.”
Profit before tax at $18.87 billion for 2015 versus $18.7 billion the previous year. This is below a Reuters poll of analysts which forecasted $21.8 billion. Adjusted revenue was also only up 1% at $57,765 million.
Although that doesn’t seem on the surface absolutely terrible, analysts had expected the bank to post bigger numbers considering it is cutting around 50,000 jobs in the bid to save $5 billion (£3.1 billion) a year by 2017. The bank, like most others, is seeking to cut costs and reduce the size of its capital-intensive investment banking operations.
Last week, the bank u-turned on a global pay freeze last week after a protest from employees, saying it would find cost savings elsewhere.
HSBC said today that Gulliver will take a £300,000 pay cut to £7.3 million.
Meanwhile, HSBC this month also finally chose to keep its headquarters in the UK after a long-running relocation review. The bank, one of the world’s largest by assets, considered Hong Kong, the US, and Canada in its list of potential new homes.
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