HSBC said it plans to cut less than 2 per cent of its workforce as the lender looks to reduce the rate of its cost growth in a more challenging market environment. As of June 30, the bank, which is based in London, but generates more than half of its revenue in Asia, had 237,685 full-time employees worldwide and had an additional 9,647 contractors. As part of its second quarter results, the bank said that it had set aside severance costs of US$248 million in the first half of the year related to its efforts to reduce costs, with about US$199 million recognised in the second quarter. The company said it plans for severance costs of US$650 million to US$700 million over the course of the year, equivalent to less than 2 per cent of its workforce. The bank intends to shave about 4 per cent off its wage costs over the course of 2019, Ewen Stevenson, the bank’s chief financial officer, said on Monday. The job cuts would come from lay-offs, as well as “natural attrition” where positions are not filled after a person leaves the company. HSBC’s CEO makes surprise departure as bank seeks new growth “Most areas of the bank have been involved in cutting headcount,” Stevenson said on a call with analysts. The announcement came on the same day that HSBC said that its chief executive John Flint had stepped down and the lender would begin a search for a new top executive. The bank also said on Monday that its pre-tax profit came in ahead of analysts’ expectations. HSBC did not specify the regions or business lines where jobs were being reduced, but said it would target “more senior ranks” of the company. HSBC scraps minimum balance fee for 3 million Hong Kong customers “I’m not going to give too much colour on where the job cuts are coming. We want to speak to our people before we speak externally,” Stevenson said. “Broadly, we are adding headcount where we see good growth and good returns. Various parts of Asia and Hong Kong would fall into that bucket. We’re cutting headcount in other areas where there isn’t the same growth and return dynamic.” The company added 2,468 full-time positions in the first half of the year, driven by investments in growing parts of its commercial banking and retail banking and wealth management operations, as well as investments in its digital operations, the bank said. Stevenson said that the bank remains committed to achieving a return on tangible equity target above 11 per cent in 2020, but realised several months ago that its outlook for revenue growth had softened and it would need to reduce costs. HSBC increased costs at a rate of 5.6 per cent in 2018, Stevenson said. Over the next 18 months, he said the bank expects costs to increase in the “low single digits” as it has taken “decisive action” to reduce its run rate. HSBC first-quarter profit up 34 per cent on growth in Asia, to add jobs The lender said the outlook had changed as “interest rates in the US dollar bloc are now expected to fall rather than rise, and geopolitical issues could impact a significant number of our major markets.” HSBC also said that the nature of and potential effect of the United Kingdom’s exit from the European Union remained “highly uncertain”. The job cuts come as other banks have reduced their headcounts as geopolitical tensions, including the US-China trade war, have cut into market confidence and sent some investors to the sidelines. “There’s no shortage of geopolitical challenges at this point in time,” Mark Tucker, the HSBC chairman said. “Clearly, as the world’s largest trade bank, we have a significant role and it is of significant importance to us.” Deutsche Bank said last month that it would slash 18,000 jobs and close its equity sales and trading business, while Nomura Holdings said earlier this year it would cut 150 jobs across its business. Bloomberg reported last week that Citigroup planned to cut at least 100 jobs in its equities business. In May, HSBC said that it planned to keep its headcount “relatively flat this year”. Last year, HSBC reported negative jaws – the difference between revenue growth and cost growth – missing a key target set by Flint when he became CEO in February 2018. In the first half of the year, HSBC reported positive adjusted jaws of 4.5 per cent. Stevenson said that it expected to report positive jaws for the year.