It's HSBC results day and more than two years into the bank's program of 35,000 job cuts there are signs that the pace of extraction has slowed but that all the previous cuts at the bank were a fine idea.
While other banks (Deutsche Bank) have cut some of their targets in light of inflation, HSBC today increased its return on tangible equity goal to more than 12% from next year, up from 10% currently. It also avowed its intention of renewing dividend payments from 2023.
HSBC now employs 218,866 people, down from 235,000 when it announced its cuts in February 2020. Although HSBC therefore appears less than halfway through its program of layoffs, the pace of the cull appears to be slowing - just 831 people across the bank have lost their jobs since December. More cuts are, however, planned.
Future cuts are most likely to hit people working in operations jobs. In the presentation accompanying today's results, HSBC says it's cut 3,000 people from operations in its Digital Business Services (DBS) team since 2019; the chart below suggests it plans to cut at least 10,000 more as it continues along its "transformation journey."
If HSBC operations jobs look insecure, the came can't be said for jobs relating to technology, digitization and data, where spending has risen 26% since 2019. HSBC says it's busy building a full service IT system in standalone options, plus a new minimum requirement for own funds and eligible liabilities (MREL) stack tailored for HSBC Asia.
In global banking and markets in particular, HSBC's FX traders look like the second quarter year's darlings. FX revenues were up 66% year-on-year in the quarter, to $1.1bn, offsetting a $24m drop in equities sales and trading revenues and an $89m drop in broader debt markets revenues. Less favoured were the investment bankers: HSBC's capital markets and advisory bankers saw their revenues halve as M&A and financing deals waned. These days, the bank says it's all about originating revenues in the West and booking them in the East: this kind of thing rose 8% in the second quarter, said CEO Noel Quinn.
Will HSBC's FX traders get paid for their success? HSBC doesn't break out compensation spending, but there's little sign of increased rewards so far: operating expenses in global banking and markets fell 7% year-on-year in the quarter.
HSBC employees who find themselves at the forefront of any cuts could potentially move to other roles within the bank. The bank has set up an internal "talent marketplace" driven by artificial intelligence.
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