HSBC Lost 35,000 jobs due to Falling Profits - Kunal Singh

HSBC is one of the most renowned banking firms in the world and they let go 35000 employees because of the fact that their profits fell by 1 billion dollars. Profit is one of the main incentives of firms to do their service in this case investment banking because increasing profits benefits three important stakeholder groups: Consumer, Employees and Firms. Profits is the difference between the Total revenue and the Total costs. Profits can increase the consumer surplus because some of the profits can be reinvested back in the firm and increase their product quality.The consumer surplus is defined as the difference between the price consumers are willing to pay and the price they actually pay. Producers benefit from profits also because it incentivises them to increase production. However, due to the loss of profits firms had to let go employees because that reduces the costs thus maintaining the profit levels. This is because investment banking is a highly skilled job so they have high salaries therefore the cutting jobs saved a lot of money for HSBC. This profit plunge was because of the Covid-19 virus, as a result of this, consumers are unwilling to spend their money and invest in banks because of uncertainty of the future and low confidence levels. HSBC are also reducing their assets it owns by $100 billion by the end of 2022 as part cost reducing methods.