HSBC tanks the most since 2017 after announcing a $7.2 billion overhaul charge (HSBC) | Markets Insider
HSBC shares tumbled as much as 5.6% early Tuesday after the bank unveiled its third restructuring plan in a decade. The overhaul looks to cut as many as 35,000 jobs by 2022 as well as halt share buyback programs planned for 2020 and 2021. Restructuring costs are estimated to hit $6 billion, while asset disposal charges will total $1.2 billion through 2022, the bank said. The bank also announced its fourth-quarter earnings on Tuesday, reporting a 33% drop in pre-tax profits year-over-year. Watch HSBC trade live here.
HSBC shares fell as much as 5.6% in early Tuesday trading after the bank announced plans to cut 35,000 jobs in a major overhaul. Europe's largest investment bank by market cap looks to slash underperforming offices in the US and Europe and focus on Asia for further growth. HSBC expects to take a $6 billion charge from restructuring and a $1.2 billion charge from asset disposal costs over the next three years. Tuesday's drop on the London Stock Exchange was HSBC's biggest since September 2017, according to Bloomberg. The company posted its fourth-quarter results on Tuesday alongside the overhaul plan. Quarterly revenue and pre-tax earnings landed above analyst estimates, but profits fell 33% from the year-ago quarter. Here are the key numbers: Revenue: $13.1 billion, versus the $13 billion estimate Quarterly pre-tax profit: $4.3 billion, versus the $3.9 billion estimate 2019 pre-tax profit: $22.2 billion, versus the $21.8 billion estimate Total jobs: down to 200,000 by 2022 from 235,000 Share buybacks will be suspended for 2020 and 2021, and gross assets held by the bank will be reduced by $100 billion over the next three years, according to the report. HSBC warned coronavirus fallout will bring additional hits to future performance, but the magnitude of the damage is still unclear. "Depending on how the situation develops, there is the potential for any associated economic slowdown to impact our expected credit losses in Hong Kong and mainland China," the bank said in its latest quarterly report. The bank is going to be "surgical and ruthless" in its plan to cut underperforming businesses, Chief Financial Officer Ewen Stevenson said in a Bloomberg TV interview. HSBC plans to combine its consumer banking and private banking divisions into a standalone platform, while also shrinking its global reporting lines to four from seven. The latest restructuring plan is HSBC's third in a decade, and comes amid a continued search for a permanent CEO. Former chief executive John Flint left the company roughly one year after his 2018 improvement plan failed. Chairman Mark Tucker now leads the plan to cut costs and capitalize on Asian and Middle Eastern markets while also looking to fill the bank's top role. HSBC traded at $35.82 per share as of 12 p.m. ET Tuesday, down 8% year-to-date. Now read more markets coverage from Markets Insider and Business Insider: Apple sees $45 billion in market value wiped out after warning the coronavirus will push revenue below forecasts China will start destroying cash collected in areas with high exposure to the coronavirus The HR chief at a $12 billion cybersecurity company says the best person for the job isn't always the most qualified. Here's why more execs are adopting the same mindset. Join the conversation about this story » NOW WATCH: A big-money investor in juggernauts like Facebook and Netflix breaks down the '3rd wave' firms that are leading the next round of tech disruption
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United Airlines plummets 8% after revealing the coronavirus outbreak drove a $2.1 billion quarterly loss (UAL)
United Airlines shares tanked 8% in early Monday trading after the company revealed it lost $2.1...United Airlines shares tanked 8% in early Monday trading after the company revealed it lost $2.1 billion in pretax profits over the first quarter. Preliminary revenue dropped 17% to $8 billion over the period as the coronavirus pandemic halted flights and eliminated airlines' key revenue streams. United expects to take in $5 billion in relief funds from the US and apply for an additional $4.5 billion in loans as it weathers the outbreak. Travel demand has plunged to "essentially zero and shows no sign of improving in the near term," president Scott Kirby and CEO Oscar Munoz wrote in an April 15 letter. Watch United Airlines trade live here. United Airlines stock slipped as much as 7.6% in early Monday trading after the airline revealed how hard the coronavirus tanked its first-quarter earnings. The airline lost $2.1 billion in pretax profits through the period as sales halted amid historically low travel demand, according to a regulatory filing. The announcement preludes a slew of brutal earnings reports from firms hit by the virus' spread, including cruises and airlines. Preliminary first-quarter revenue slid 17% to $8 billion. The company's quarterly loss stands at $1 billion after adjustments. United expects to receive $5 billion from the US in payroll grants and loans as it weathers the health crisis. The Chicago-based firm said it has also applied for up to $4.5 billion in government loans. Read more: An money-management duo overseeing $37 billion outlines the 5 criteria they seek in investments that are 'almost impossible to compete with' — and shares 3 stocks they've been buying amid market mayhem Nearly all profit loss over the three-month period arrived in March, as the virus strangled travel routes and forced widespread quarantine activity. United has slashed capacity by 90%, freezing most revenue streams as the world fights to contain the virus. The pace of operations will remain similar through June, United said. The company warned of an outsized decline in performance in an April 15 letter. Travel demand has plunged to "essentially zero and shows no sign of improving in the near term," president Scott Kirby and CEO Oscar Munoz wrote. Even the government's $2 trillion relief measure "can't fix" the downturn and its lasting effects, they added. Delta Airlines is scheduled to announce its first-quarter figures on Wednesday, previewing the damage incurred across the troubled industry. United Airlines traded at $27.19 per share as of 9:35 a.m. ET Monday, down about 67% year-to-date. The S&P 500 is down roughly 11% over the same period. Now read more markets coverage from Markets Insider and Business Insider: Why are stocks soaring as the economy melts down? Thank the Fed. The White House stalls tariff payments for pandemic-battered firms while keeping taxes against China unchanged Bharat Ramamurti is one of just 4 people overseeing a $500 billion corporate bailout fund. He tells us how a 2008-style populist revolt could emerge if executives benefit more than workers — and outlines how he's pressuring the Fed. Join the conversation about this story » NOW WATCH: Tax Day is now July 15 — this is what it's like to do your own taxes for the very first time
Goldman Sachs officially predicts a coronavirus-driven recession will hit the US, sees GDP shrinking 5% in 2nd quarter
The coronavirus pandemic will drag the US into a recession after a sharp decline to economic...The coronavirus pandemic will drag the US into a recession after a sharp decline to economic activity through the first half of the year, Goldman Sachs said Sunday. GDP growth will slow to a halt in the first quarter before shrinking 5% in the second quarter, the bank's analysts wrote. The slump will be followed by a strong rebound in the second half of the year, they added. While most recessions include two consecutive quarters of economic contraction, a looser definition used by the National Bureau of Economic Research would likely deem Goldman's projection sufficient for an economic recession, the bank said. Visit the Business Insider homepage for more stories. The coronavirus' hit to US economic activity will hit the second quarter the hardest and likely drag the country into a recession, Goldman Sachs said. The bank revised its quarterly gross domestic product estimates in a Sunday note, lowering its expectations for near-term expansion and upgrading projections for later in the year. Economic growth will halt in the first quarter before contracting 5% in the second quarter, the analysts wrote. The US will bounce back through the end of the year with 3% growth in the third quarter and 4% expansion in the last three months of 2020, they added. Goldman now expects annual GDP growth to hit 0.4%, compared to its former 1.2% estimate. How quickly the country can rebound depends on several unclear variables, including warmer weather's effect on the infection rate and the effectiveness of social distancing measures, the analysts said. "The uncertainty around all these numbers is much greater than normal," they added. Read more: BANK OF AMERICA: Buy these 13 cheap stocks that could skyrocket 35% or more — because they're shielded from recession and a sharp China slowdown The demand slowdown driven by coronavirus will most drastically hit the travel, entertainment, and restaurant sectors, the analysts wrote. Major US cities have already called for restaurants to operate on a take-out-only basis to curb additional infection. Complex supply chain problems and continued tightening in financial conditions will likely cut further into economic growth, according to the bank. A recession's technical definition calls for back-to-back quarters of negative growth, yet Goldman notes its single quarter of a sharp decline fits a looser interpretation. The National Bureau of Economic Research determines whether a US economic expansion officially begins or ends, and has previously deemed contractions lasting "just a few months" as sufficient for an economic recession. "Would the NBER business cycle dating committee classify our new forecast as a recession, given that it involves only one quarter of strictly negative growth? It is not entirely clear, but we think the answer is probably yes," the team of analysts wrote. Now read more markets coverage from Markets Insider and Business Insider: Investors need to brave 'ghosts of 2008' and keep cash ready amid the coronavirus sell-off, top market strategist says JPMORGAN: The best case scenario for stocks is a Biden presidency with a Republican Senate From serving burgers at Red Robin to 250 units: Here's how James Dainard turned a clever real-estate investing strategy into an empire — and made $1 million off a property that was 'just sitting there'Join the conversation about this story » NOW WATCH: A big-money investor in juggernauts like Facebook and Netflix breaks down the '3rd wave' firms that are leading the next round of tech disruption
The London-based bank aims to cut $4.5 billion in costs and scale back its Western operations.