HSBC expected to report fall in profits as it struggles to cut costs

Earlier this month HSBC imposed a 10% pay cut on its contractors and asked them to take two weeks unpaid holiday, as the global bank pushes ahead with its drive to cut costs.

The move is centred on the lender's global banking and markets investment banking division based in London, and is expected to affect hundreds of workers, from IT staff to analysts and others on fixed-term contracts.

The measure is part of an overall strategy presented in a summer update when the bank promised to axe 50,000 jobs over the next two years by closing retail branches, shrinking its investment bank and selling its Brazilian and Turkish operations as it shifts resources to more promising Asian markets.

The bank said the moves are aimed at saving up to 5 billion US dollars (£3.3 billion) by the end of 2017.

As part of its June strategy Mr Gulliver said the lender would target growth in Asia by expanding its insurance business and its presence in China's Pearl River Delta region.

It added it planned to return its global banking and markets division to profitability - an area which has become more expensive for banks in the tougher regulatory environment since the financial crisis.

The bank is also pressing ahead with measures to relocate the head office of its UK retail bank from London to Birmingham by 2018 ahead of new ring-fencing rules separating this part of the group from its investment arm. This part of the bank will hold 22,000 UK staff.

Last month HSBC said it would rebrand its British retail business as HSBC UK in a move ending months of speculation that the group was planning to revive the Midland name on the high street.

Midland is understood to have been one of a few names being looked at by HSBC for the rebrand, as its UK branches used to be known as Midland Bank before they were swallowed up by HSBC in 1992. HSBC will roll out the new name from January 1 2018.

The move to retain the HSBC brand has cooled City talk that it will sell the UK arm following ring-fencing, due to come into effect in 2019.

High street retailer Marks & Spencer is expected to see its profits edge up when it posts its half-year results on Wednesday as the recovering business struggles to maintain momentum.

The City expects the firm to post underlying interim pre-tax profit up by 0.7% to £270 million, as fewer promotions and better product sourcing were hampered by wet weather which hit sales in August.

The retailer is forecast to see general merchandise like-for-like sales fall by 1.2% in its second quarter of the year, as it battles to consistently boost weak store trading.

Its second quarter like-for-like food sales are expected to lift 0.2%, as its upmarket produce manages to outperform a grocery market characterised by prices that have fallen for over a year.

Under pressure chief executive Marc Bolland said at the firm's July annual meeting at Wembley Stadium in London he will continue to cut back on promotions and implement better product sourcing to bolster margins at its general merchandise division, which holds its key clothing unit.

But like-for-like general merchandise sales look set to decline for two quarters in a row. This comes after a 0.7% rise in like-for-like general merchandise sales earlier in this calendar year, before that sales at this unit had fallen for 14 quarters in a row.

In May, M&S turned a corner by posting its first annual profits increase in four years, progress that Mr Bolland will want to maintain.

The firm reported underlying profits for the year to March 28 rose 6.1% to £661.2 million, beating City expectations, and easing some of the intense pressure Mr Bolland has been under in recent years.

Items such as a much-talked about 1970s-style suede skirt worn by TV presenter and model Alexa Chung have helped improve the image of Marks's clothing range.

Mr Bolland took over at M&S in 2010 and during his tenure he saw rival Next overtake the annual profits haul at his business.

Under his leadership, M&S has poured billions of pounds of investment into the firm to try to turn around its fortunes, while clearing out its top fashion team, and recruiting celebrities for high-profile marketing campaigns.

Yet improvements made at its key general merchandise have yet to firmly take root.

The group suffered delays before Christmas after the relaunch of its online service M&S.com, but it said the operation has made good progress since then.

Analysts at Deutsche Bank expect its online business to see sales jump 35% in the second quarter, but added what needs to be addressed is the "continued weak performance from stores."

Morrisons is expected to post another fall in quarterly trading on Thursday as the supermarket chain continues its turnaround plan.

Analysts at Jefferies expect the country's fourth biggest grocer to post a third-quarter like-for-like sales fall of 2% compared to a year ago, as the firm moves from a heavy reliance on money-off vouchers to lower overall pricing.

The Bradford-based chain announced the closure of 11 supermarkets putting 900 jobs at risk as it reported its latest slump in profits in September.

It said pre-tax profits for the half-year to August 2 fell 47% to £126 million while like-for-like sales for the period dropped 2.7% compared with the same period last year.

New chief executive David Potts said the group faced a ''long journey'' to turn around its fortunes.

UK supermarkets continue to fight a fierce price war, with Morrisons and Big Four rivals Tesco, Asda and Sainsbury's squeezed by discounters Aldi and Lidl.

Mr Potts took the helm in March from Dalton Philips, who was ousted 12 months after the announcement of a three-year £1 billion programme to cut prices to fight the supermarket price war.

The new boss has pledged to restore the chain's fortunes by improving its products and service levels and sharpening its pricing.

The group also agreed to sell its 140 loss-making M local convenience stores for around £25 million to retail entrepreneur Mike Greene, who is backed by family investment group Greybull Capital.

Mr Potts said Morrisons had been 15 years late entering the convenience store sector in 2011 and added that one lesson from its experience was ''don't hang around''.

But just a few weeks later in October Morrisons re-entered the convenience market when it signed a pilot to put five stores in petrol filling station shops owned by Motor Fuel Group (MFG).

The 1,200 square foot Morrisons shops will open by the end of the year.

Despite an expected third quarter fall in profits most analysts forecast the business to maintain its annual pre-tax profit target of £308 million.

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