HSBC Holdings signalled it would embark on a pandemic-induced overhaul of its business model, seeking to flip its main source of income from interest rate to fee-based businesses.
Reporting a 35% tumble in quarterly profit, Europe’s largest bank also accelerated plans to shrink in size, targeted deeper cost cuts, and said it will resume conservative dividend payments when able.
The planned business model changes mark one of the biggest shifts in strategy to date from HSBC, which has long touted its ability to generate interest income from its more than $1.5 trillion in customer deposits.
But with interest rates worldwide now rock bottom and even turning negative, the bank is struggling to charge more for loans to borrowers than it pays out to depositors and it warned that net interest income would remain under pressure.
