HSBC’s CEO zeroes in on cost cuts after Q1 profit increases

Bloomberg

HSBC Holdings Plc Chief Executive Officer John Flint is pressing ahead with a plan to rein in costs after the Asia-focussed lender reported its best quarter in more than three years.
The better-than-expected first quarter results were driven by revenue growth that increased at triple the pace of adjusted operating expenses, reversing a pattern that bedeviled Flint in 2018. HSBC made 80 percent of its profit in Asia, while Europe accounted for about 1 percent, highlighting the importance of Hong Kong and China to its earnings.
“These are an encouraging set of results, and we remain focussed on executing the strategy we outlined last June,” Flint said in a statement, noting the uncertain outlook for the global economy. “We are proactively managing costs and investment.”
Keeping the top line growing faster than expenses, known in banking jargon as “positive jaws,” has been a key focus for Flint as he seeks to put his stamp on the bank. The CEO berated his most senior managers in March for missing cost targets, people with knowledge of the matter have said.
HSBC’s adjusted pretax profit rose 9.5 percent in the first quarter to $6.35 billion, versus the $5.69 billion consensus estimate of 16 analysts compiled by the bank. Adjusted revenue rose 9 percent, also ahead of estimates.
Europe’s biggest lender has faced questions over its strategy since it failed to deliver on a pledge to deliver positive jaws in 2018. The London-based bank elevated Flint last year to replace Stuart Gulliver, brin- ging to an end a seven-year term marked by asset sales, job cuts and a pivot towards Asia. Since Flint took over in February of last year, the shares are down about 10 percent.