HSBC reported a pre-tax profit of $6.3 billion for the second quarter of 2024, down 29% from the previous year and missing profit expectations due to impairment charges related to Chinese banks and revenue losses from recently disposed businesses. Operating expenses rose by 10%, largely driven by increased spending on restructuring and technology. CEO Georges Elhedery cited “structural challenges” in the global economy, including tariffs and market volatility, complicating the outlook for inflation and interest rates.
The bank indicated that while the direct impact of tariffs on revenue would be modest, the overall economic deterioration could affect future profit-generating measures. Lending demand remains muted, but HSBC forecasts growth in average annual rates and other income in the medium term.
Additionally, HSBC plans to reduce its investment banking operations outside of Asia and the Middle East, with layoffs in its German office. This is part of a broader restructuring initiative that aims to simplify operations and cut costs. HSBC previously announced its intent to focus on four divisions that separate “Eastern Market” and “Western Market” sectors, aiming to save approximately $300 million this year. The immediate challenge facing the bank includes finding a successor for group president Mark Tucker, who will leave in September.
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