HSBC has reported a 32% jump in quarterly pre-tax profit to 9.6 billion US dollars (£7.2 billion) for the three months to September, as the banking giant nears the end of a two billion US dollar (£1.5 billion) cost-cutting programme.
The bank said it had made bigger savings than it originally set out to do, with operating expenses – including day-to-day spending such as salaries – coming in 1.3 billion dollars (£980 million) lower than the same period last year.
Cost savings beat target
HSBC said it had beaten its target of reducing the cost base by around 1.5 billion dollars (£1.1 billion) a year by the end of 2026, achieving cost savings worth 1.9 billion dollars (£1.4 billion) so far. It expects to reach two billion dollars (£1.5 billion) by the end of the year.
The profit rise was driven by higher income from interest rates, lower expected credit losses, and a smaller provision for legal costs than in the same period last year.
Shareholder returns and AI focus
The bank also announced it would hand up to one billion dollars (£750 million) to shareholders as part of a new share buyback scheme.
Chief financial officer Pam Kaur said the cost savings have come from “a range of places” including the “deduplication of roles”, which particularly impacted more senior positions. She also said the bank was encouraging staff to build their AI skills and be “future ready”.
“And that’s so important for us because, in our judgment, what’s most important for an AI strategy to work is to keep the human accountability, judgment and decision-making very much at the core of what we do,” she said. “So AI is there to help humans, not necessarily to replace humans.”
Workforce impact
Reports, according to the Financial Times, said the bank was preparing to cut jobs in its UK wealth management business as part of efforts to ramp up the use of AI to serve wealthy customers more efficiently.
Ms Kaur said she would not comment on the speculation about job losses but that the bank “absolutely focuses on the workforce we have, both in terms of skilling it and building on it”.
Chief executive Georges Elhedery said: “Our performance shows that in a more complex world clients continue to turn to us to navigate uncertainty and seize new opportunities. It also reflects consistent execution of our strategic priorities with pace, precision and discipline. As we simplify HSBC, we are creating greater capacity to invest, grow and deliver strong returns for our shareholders.”
