HSBC to Revamp Business Model as Profits Take a Hit

HSBC Holdings announced it would embark on a pandemic-induced business model revamp in order to focus on fee-based businesses, as opposed to interest rates, following a 25% fall in quarterly profits. HSBC’s revenue fell 11% compared with the third quarter last year to $11.9 billion. The bank further declared it has accelerated plans to reduce its size and further slash costs.

This business model alteration is a 360 degree one, to say the least. HSBC has since the beginning of times focused on generating interest income, but now that rates worldwide have hit rock-bottom, the bank has faced serious issues, struggling to charge more for loans to borrowers than it pays out to depositors. HSBC additionally mentioned it could start charging customers for products such as current accounts.

HSBC now expects losses from bad loans to be at the lower end of the $8 billion to $13 billion range it set out earlier this year.

"This latest guidance, which continues to be subject to a high degree of uncertainty due to Covid-19 and geopolitical tensions, assumes that the likelihood of further significant deterioration in the current economic outlook is low," HSBC commented.

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