HSBC share price outlook as it eyes another round of layoffs

The HSBC share price has slumped and moved into a correction after falling by 12% from its highest point this year. It has dropped to 1,210p, mirroring the performance of other European banks. So, will it rebound as the company plans more job cuts amid its AI investment?

HSBC plans massive job cuts

HSBC, the biggest bank in Europe, continues to implement a turnaround, a move meant to improve its position in the Asian market. It has scaled back its international business by exiting its markets like Argentina, France, and the United States.

HSBC also merged divisions and moved some of its senior executives to Hong Kong, as it continues to target Chinese clients. It intensified this presence by acquiring Hang Seng Bank, a company it already had a stake in.

Now, the company is aiming to continue this turnaround by laying off at least 20,000 workers in the coming years. Most of the workers who will be affected are the non-client-facing customers in global service centers. Many of these roles will be replaced by artificial intelligence tools.

The company has already shed thousands of jobs under Georges Elhedery, a move that has reduced its costs in the past few years. It expects to achieve $1.5 billion in cost savings in the first half of the year, six months ahead of schedule.

HSBC’s business is doing well

The most recent results showed that HSBC’s business is doing relatively well, a trend that may continue in the coming months.

Its profit before tax came in at $29.9 billion, down by $2.4 billion from a year earlier. This decline was mostly because of a $4.9 billion increase in adverse impact from notable items. Some of these items were because of its stake in Bank of Communications and the sale of its French portfolio.

Other metrics in its report were much higher than expected. For example, its revenue jumped to $68.3 billion last year, up by $2.4 billion in the previous year.

Additionally, the company’s guidance pointed to sustained growth, with the Return on Tangible Equity (RoTE) rising to 17% in the next three years, with its annual revenue growing by 5% in the same period. Also, it expects that the net interest income (NII) will be at least $45 billion this year.

HSBC stock chart | Source: TradingView

The three-day chart shows that the HSBC stock price has pulled back in the past few weeks, moving from 1,374p in February to the current 1,210p.

A closer look shows that the stock has formed a harami candlestick pattern, which is characterized by a small bullish candle that settles inside a big bearish candle. A harami candle is a common bullish reversal sign in technical analysis.

The stock has remained above the 25-day Exponential Moving Average (EMA). Therefore, there is a possibility that it will bounce back, and possibly retest the year-to-date high of 1,375p.