HSBC more than doubles pre-tax profits to $17.2B
BANKING giant HSBC more than doubled pre-tax profit to $17.2 billion in 2017, it announced yesterday, after a recovery drive to streamline its business and slash costs.
Adjusted pre-tax profit also rose 11 percent year-on-year to $21 billion as revenue growth outweighed operating expenses, the bank said.
But analysts said that although HSBC had bounced back after restructuring and a string of financial scandals, it missed some profit forecasts with margins looking comparatively good in 2017 because of specific one-off losses the previous year, including the sale of the bank’s Brazil business.
The bank’s shares were down in afternoon trading, falling 2.09 percent in afternoon trading at HK$81.8 ($10.5).
Analysts cited the lack of a reliable growth engine due to inconsistent markets and the threat of US interest rate hikes as problematic for the bank, with a lack of clarity on share buybacks weighing on the stock price.
The results came as new Chief Executive John Flint takes over from Stuart Gulliver, who steps down following seven years at the helm.
Flint, who was previously head of retail banking and wealth management at HSBC, has said he wants to accelerate the pace of change at the bank.
The Asia-focused firm has laid off tens of thousands of staff since 2015 as part of a wide-ranging overhaul, including the sale of its Brazil business.
Its strategy of expanding business in the Pearl River Delta, an area of southern China including major cities such as Hong Kong and Guangzhou, has boosted performance, with Asia business driving more than 75 percent of reported and adjusted profit in 2017, the bank said.
Gulliver described HSBC as “simpler, stronger, and more secure” than it had been when he became chief executive.
But Chairman Mark Tucker warned that while the bank was optimistic about the global economy in 2018, rising international tensions and the threat of protectionism could be disruptive.
Yesterday’s surge in reported pre-tax profit was a 141 percent rise on the $7.1 billion it posted in 2016.
Net profit stood at $9.7 billion in 2017, up from $1.3 billion year-on-year.
Gulliver said the bank had strengthened its compliance systems and ability to manage crime risk in the wake of a range of prosecutions and fines.
In December, US authorities lifted the threat of prosecution against HSBC, five years after it admitted to widespread money laundering and sanctions violations.