- HSBC reported an 18% drop in profit in the third quarter and downgraded its outlook as revenue was expected to be softer than expected amid a challenging environment.

The bank said it no longer expected to reach its return on tangible equity (RoTE) target of more than 11% in 2020 as the outlook for revenue growth was softer than anticipated at the half-year, owing to a more challenging revenue environment than in the first half of 2019.

'Our previous plans are no longer sufficient to improve performance for these businesses, given the softer outlook for revenue growth,' the bank said.

'We are therefore accelerating plans to remodel them, and move capital into higher growth and return opportunities.'

HSBC outlined plans to rebalance its capital away from low return businesses and adjust its cost base accordingly. But it warned that the actions to be undertaken, or any continuing deterioration in the revenue environment, could result in 'significant charges in the fourth quarter and subsequent periods, including the possible impairment of goodwill and additional restructuring charges.'

Reported profit before tax fell 18% to $4.8bn in the three months through September and included additional customer redress provisions of $606m and $120m of severance costs.

Revenue, meanwhile, was down 3% to $13.4bn for the quarter, with the bank blaming lower client activity in global markets, compared with a strong activity in the third quarter last year.

'Parts of our business, especially Asia, held up well in a challenging environment in the third quarter,' HSBC said.

'However, in some parts, performance was not acceptable, principally business activities within continental Europe, the non-ring-fenced bank in the UK, and the US.'

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