HSBC Holdings PLC (LSE:HSBA) chief financial officer Ewen Stevenson said rising inflation could force the bank to increase salaries significantly despite aiming to make "brutal" cuts in an effort to contain costs.
"We are seeing pretty broad cost inflation," Stevenson reportedly said at a financial services conference hosted by Barclays in New York.
"Half of our cost base is fixed pay. We are thinking that we will have to materially step that up again in 2023 relative to 2022."
According to Stevenson, HSBC will fall short of its cost target next year by about US$500mln, and despite aiming to limit cost growth to no more than 2%, the bank faces a 6% to 7% rise in underlying costs.
It can only be eliminated by being extremely brutal internally when it comes to costs, he said.
Chief executive Noel Quinn and he both prioritise cost control over revenue growth, he said.
"A lot of it depends on the CEO's commitment," said Stevenson, reports Bloomberg.
"He has been pretty clear internally that he intends to hit that 2% cost target. So as long as he wakes up every day feeling that, I feel like I am in a good place."