HSBC bank to seek US$2.5-3.5 bln of cost savings

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Banking giant HSBC said Wednesday it will cut US$2.5-3.5 billion (1.7-2.4 billion euros) in costs by 2013 as part of a strategic review, two days after unveiling mixed first-quarter results.

"US$2.5-3.5bn of sustainable cost saves (are) targeted over the next three years," HSBC said in a stategy update that was published ahead of an investor day in central London.

The cost-cutting measures will include streamlining IT operations and simplifying the group's organisation, but no figures were given for the number of job cuts.

"We have launched a programme to target US$2.5-3.5bn of cost saves to reach our cost efficiency ratio target of 48-52 percent," said Chief Executive Stuart Gulliver in the statement.

He added: "This is not about shrinking the business but about creating capacity to re-invest in growth markets and to provide a buffer against regulatory and inflationary headwinds.

"I and my experienced management team are committed to achieving these operating and financial targets and are wholly accountable for their delivery."

HSBC had announced on Monday that net profits surged 58 percent to $4.15 billion in the first quarter on lower taxes and bad debts.

However, at the same time, Europe's biggest bank also revealed that its pre-tax gains were pushed down by rising staff costs and by money set aside to compensate customers in Britain who were mis-sold credit insurance.

The group headquartered in London said that profit after tax for the three months to March 31 rocketed to $4.153 billion (2.88 billion euros) from $2.631 billion in the first quarter of 2010.

Adjusted pre-tax profit fell eight percent to $5.5 billion, which was below analyst expectations for underlying earnings of about $6 billion according to a survey by Dow Jones Newswires.

© 2011 AFP

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