HSBC cost savings gather pace

Banking giant HSBC has made 1.2 billion US dollars (£741 million) in cost savings in the last year as it cuts thousands of jobs worldwide, including the UK.

The bank, which employs 52,000 people in the UK, has cut 14,000 jobs since the first three months of 2011, including 3,500 so far this year, as the group rolls out a restructuring programme to cut layers of management and streamline its IT requirements.

HSBC, which wants to slash its workforce by 10% or 30,000 by 2013, said it made cost savings of 300 million US dollars (£185 million) in the first three months of the year.

The group unveiled pre-tax profits for the three months to March 31 of 4.3 billion US dollars (£2.66 billion), a 30% increase on the previous quarter but an 11% drop on the same quarter last year. The quarterly improvement was driven by a stronger performance in investment banking.

HSBC said it made a 468 million US dollar (£290 million) provision in the first quarter against payment protection insurance mis-selling claims, taking the total amount set aside to tackle compensation claims to 908 million US dollars (£745 million).

Revenues rose strongly in the bank's faster-growing regions, notably in Latin America, Hong Kong and Asia-Pacific, which were up by 7%, 16% and 18% respectively.

Net operating income before bad debt charges was 16.2 billion US dollars (£10 billion) in the first quarter of the year, down on the same period last year.

Investment arm Global Banking & Markets performed well as pre tax profits nearly tripled on a quarterly basis to 3.1 billion US dollars (£1.9 billion).

Bad debt charges were cut to 2.4 billion US dollars (£1.4 billion) from 2.9 billion US dollars in the previous quarter, a decline of 20%.

Group chief executive Stuart Gulliver said: "Markets remain volatile with high levels of debt and regulatory and political uncertainty in developed economies, contrasting with an encouraging outlook in faster-growing markets."

The group has announced 11 disposals and closures of businesses this year as part of its strategy, including the acquisition of the onshore retail and commercial banking business of Lloyds Banking Group in the United Arab Emirates.

Mortgage lending continued to grow strongly in the UK, HSBC said, reflecting targeted sales activity.

Shares in HSBC were just under 1% higher after today's update.

Jonathan Jackson, head of equities at Killik & Co, said: "HSBC is one of the few truly global banks, both for corporate and individual customers. It is well placed to benefit from continued globalisation and the shift of economic power to Asia, with a strong position in Greater China as the leading Hong Kong bank."

PA