HSBC shares down as full year profit falls 62%

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HSBC shares down as full year profit falls 62%

Post by Manager on Tue Feb 21, 2017 6:32 am


21 February 2017
Business
HSBC building
Shares in HSBC have fallen after the bank saw a sharper-than-expected drop in annual profits for 2016.

The $7.1bn (£5.7bn) pre-tax profit is 62% lower than the $18.9bn reported a year earlier.

HSBC attributed the fall to a string of one-off charges, including the sale of its operations in Brazil.

It said its performance had been "broadly satisfactory" given "volatile financial conditions" but warned a rise in global protectionism was a concern.

HSBC stocks were down by 3.5% in Hong Kong. Trading in London will begin later.

'Uncertainties'

Alluding to the US election and the UK's vote to leave the European Union, the bank said 2016 would "be long remembered for its significant and largely unexpected economic and political events".

"These foreshadowed changes to the established geopolitical and economic relationships that have defined interactions within developed economies and between them and the rest of the world," chairman Douglas Flint said.

"The uncertainties created by such changes temporarily influenced investment activity and contributed to volatile financial market conditions."

Looking ahead to 2017, the bank said the "outcome of the US election has added to concerns about a rise in protectionism".

"This has been accentuated in many parts of the world by technological change and income inequality."

HSBC said that any "amplification of this trend" would lead to a disruption in global trade and affect its traditional line of business.

HSBC
The bank confirmed last year it would keep its European headquarters in London, despite the Brexit vote.

But announcing the results on Tuesday, Mr Flint said the bank's current planning suggested it may need to relocate some 1,000 roles from London to Paris over the next two years, depending on how negotiations develop.

He added the bank had "broadly all the licenses and infrastructure needed to continue to support our clients once the UK leaves the EU".

'Digital transformation'

HSBC makes most of its money outside the UK, with Asia accounting for the bulk of its global pre-tax profits.

Earlier this year it revealed plans to shut a further 62 UK bank branches in 2017, as more customers conducted their transactions online. The bank closed 223 UK branches last year.

Group Chief Executive Stuart Gulliver said the bank was investing more than $2bn in "digital transformation initiatives to improve our offer to customers".

HSBC has been on a cost-cutting drive since 2015, with plans to cut 8,000 jobs in the UK and achieve $5bn in savings.

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