HSBC’s full year results, out this morning, show adjusted profit for the year was down 1.2% at $19.3bn.
The bank’s Q4 earnings had been predicted at around $3.7bn but instead came in at $2.62bn. This means that full-year pre-tax profits come in at $7.11bn, compared with $18.9bn from a year earlier.
However, impairment charges were the main catalyst for the lower-than-expected earnings, in particular the write-down of the private banking division in Europe.
The full-year dividend ticked up slightly to $0.51, and a share buy-back of $1bn was announced, following a $2.5bn share buy-back completed in December.
The bank also noted that current contingency plans suggest a need to move 1,000 jobs from London to Paris over the next two years, depending on unfolding Brexit negotiations.
Commenting, Graham Spooner, investment research analyst at The Share Centre, said: “Profits were affected by impairments on significant items, including a $2.4bn write-down of its European private banking business.
“Looking ahead, investors should appreciate that the banking giant expects to continue with its buyback programme in the first half of the year and adds that it may do additional repurchases in 2017.
“HSBC continues to expect incremental growth to be driven by its emerging market operations, where it has a significant part of its business. It highlighted today that forecast global growth remains slightly to the downside, noting that a rising in populism in Europe, protectionism and the impact of the stronger dollar on emerging economies with high debt levels are cause for concern.
“However, HSBC has given the impression that it has some confidence in its outlook stating that much of its restructuring is now complete, it has a conservative balance sheet and it is in a strong capital position.”
Laith Khalaf, senior analyst at Hargreaves Lansdown, agrees: “Despite an underwhelming set of full year results, HSBC is making progress in de-risking and restructuring, and ultimately the bank’s focus on the far east could be its trump card if the Chinese economy starts to fire on all cylinders.”
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