HSBC will target $2 billion to $3bn of additional cost savings as CEO Stuart Gulliver continues with his plan to increase profitability.
Bloomberg reports that HSBC will have a cost efficiency ratio in the 'mid-50s' for 2014-2016, the bank said in a statement to the Hong Kong stock exchange Wednesday. That compares with a target of 48% to 52% for the previous three-year period.
Gulliver, 54, has announced the sale or closing of 52 businesses to revive earnings and 46,000 job cuts to eliminate $4bn of annual costs since taking his job in 2011, beating his initial target set that year. HSBC, which earns most of its profit in Asia, has also pledged to create additional revenue through greater cooperation across its divisions.
'The additional cost savings is the biggest surprise - that may imply more disposals or staff layoffs', said Steven Chan, a Hong Kong-based analyst at Citic Securities International, who has a buy recommendation on the stock.
'The shares will continue to climb because they are now moving from a slow growth phase to a stronger growth phase'.
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image: © Howard Lake