Dim out­look for HSBC’s UK busi­ness in 2017

The Sun (Malaysia) - - SUNBIZ -

HONG KONG/LON­DON: HSBC Hold­ings warned of a dim out­look for its Bri­tish busi­ness next year and urged the gov­ern­ment to clar­ify the sta­tus of Euro­pean Union work­ers in Bri­tain as Eu­rope’s big­gest bank grap­ples with the im­pact of the vote to leave the EU.

“UK re­tail bank­ing profit will be chal­leng­ing next year,” chief ex­ec­u­tive Stu­art Gul­liver told Reuters yes­ter­day, point­ing to the Bank of Eng­land’s muted eco­nomic growth es­ti­mates and fore­cast for sharply ris­ing in­fla­tion.

Gul­liver said the fi­nan­cial in­dus­try has com­mu­ni­cated its pri­or­i­ties to the gov­ern­ment. Be­cause HSBC has a fully li­censed sub­sidiary in France it is in no hurry to set up busi­nesses else­where to pro­tect ac­cess to Euro­pean mar­kets.

“The thing I would say that is slightly more ur­gent is clar­ity around the sta­tus of EU na­tion­als with jobs work­ing in the UK,” Gul­liver told re­porters on a con­fer­ence call.

HSBC em­ploys around 42,000 work­ers in Bri­tain of whom some 2000 are from other EU coun­tries. Bri­tish firms are em­ploy­ing im­mi­gra­tion lawyers to ad­vise such staff over fears around their res­i­dency, Reuters re­ported in July.

Against a back­drop of shrink­ing prof­its, HSBC re­ported a sharp jump in its core cap­i­tal ra­tio to 13.9%, as the key mea­sure of fi­nan­cial strength was lifted by a change in the reg­u­la­tory treat­ment of its in­vest­ment in China’s Bank of Com­mu­ni­ca­tions.

The change in how Bri­tain’s Pru­den­tial Reg­u­la­tion Author­ity treats the in­vest­ment eased an­a­lyst con­cerns about its abil­ity to build cap­i­tal buf­fers to main­tain its div­i­dend pay­outs and lifted HSBC’s shares.

In early af­ter­noon deals, HSBC’s Lon­don share price surged 4.72% to 622.90 pence, after Hong Kong stock fin­ished 2.96% higher at HK$59.15.

HSBC posted an 86% fall in re­ported pre-tax profit to US$843 mil­lion for the third quar­ter ended on Sept 30, as it took a US$1.7 bil­lion loss on the sale of its Brazil­ian unit and faced fall­ing rev­enues from trade and ad­verse for­eign cur­rency move­ments.

Ad­justed pre-tax profit – which strips out one-off items and un­favourable cur­rency move­ments – rose 7% in the three months to Septem­ber to US$5.59 bil­lion from a year ear­lier. The bank posted a net loss of US$204 mil­lion for the three-month pe­riod, rev­ers­ing a year-ear­lier net profit of US$5.23 bil­lion.

HSBC last year an­nounced a rad­i­cal over­haul to cut an­nual costs by US$5 bil­lion over two years by shed­ding 50,000 jobs world­wide, ex­it­ing un­prof­itable busi­nesses and fo­cus­ing more on Asia. – Reuters, AFP

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