HSBC’s pivot to Asia helps drive 141% jump in annual profits
The bank said pre-tax profits rose to 17.2 billion US dollars (£12.3 billion) in the year to December 31.
HSBC has thanked its pivot to Asia for helping more than double annual profits in 2017.
Weekly Business Digest Newsletter
The lender said pre-tax profits rose to 17.2 billion US dollars (£12.3 billion) in the year to December 31, marking a whopping 141% jump compared to 7.1 billion dollars (£5.1 billion) a year earlier.
The bank said its focus on the Asian business “again contributed a substantial proportion” of group profits – driving around 75% of both reported and adjusted earnings – particularly in commercial banking, retail banking and wealth management.
Results were also flattered by comparable figures in 2016, which had been dragged lower after HSBC booked a loss on sale and trading results of the Brazilian operations it offloaded that summer.
Reported revenue for the year rose 7% from 48 billion dollars (£34.4 billion) to 51.4 billion dollars (£36.8 billion).
While the figures marked growth from a year earlier, they came in below analyst consensus forecasts.
“Overall you have to call this a strong performance from HSBC but falling short of fairly lofty expectations means the stock looks set to fall,” Neil Wilson, a senior market analyst at ETX Capital, said.
Investor disappointment sent HSBC’s London shares down 3.5% at the market open to around 733p.
HSBC logged higher expenses linked to the establishment of its UK ring-fenced bank – in line with new regulatory standards – at 392 million dollars (£281 million) compared to 223 million dollars (£160 million) a year earlier.
It also booked 28 million dollars (£20 million) in “costs associated with the UK’s exit from the EU”.
As part of its Brexit contingency plans, HSBC is on course to move up to 1,000 jobs to France where it already has a full service universal bank after buying up Credit Commercial de France in 2002.
Overall you have to call this a strong performance from HSBC but falling short of fairly lofty expectations means the stock looks set to fall Neil Wilson, senior market analyst at ETX Capital
While the overall results were “as firm as anticipated”, Mr Wilson said there were “clear signs the bank is beyond recovery phase now as Stuart Gulliver heads off on his travels”.
It is the last set of results under chief executive Stuart Gulliver, who is set to hand the reins to John Flint on Wednesday.
Commenting on the financial results, Mr Gulliver said: “These good results demonstrate the strength and potential of HSBC.
“All our global businesses grew adjusted profits and we concluded the transformation programme that we started in 2015.
“HSBC is simpler, stronger, and more secure than it was in 2011. It has been my great privilege to lead HSBC for the last seven years, and in handing over to John I am confident the organisation is in great hands.”
Looking ahead, the group’s chairman Mark Tucker said the bank was forecasting “reasonable growth” across major global economies this year thanks to low unemployment, a recovery in consumer confidence and improving trade.
Worries over a “hard landing” in China after years of relatively high economic growth have also receded, he said, noting that Asian markets “look set for a strong year” – though rising international tensions and protectionist threats could disrupt the global economy.