HSBC profit dips on bumpy fi­nan­cial out­look

The Pak Banker - - FRONT PAGE -

HONG KONG: HSBC warned of a "bumpier" global fi­nan­cial out­look thanks to China's slow­ing econ­omy, as it re­ported Mon­day that profit dipped slightly last year. Europe's big­gest bank posted a net profit of $13.5 bil­lion for 2015, down 1.2 per cent from the year be­fore and below an­a­lysts' fore­casts.

The bank also un­ex­pect­edly an­nounced a $1.3 bil­lion loss for the fi­nal quar­ter, com­pared with a $511 mil­lion profit in the same pe­riod the pre­vi­ous year.

Chair­man Dou­glas Flint said the re­sults were "broadly sat­is­fac­tory." He said in a state­ment that last year was marked by "seis­mic shifts in global eco­nomic con­di­tions," no­tably sharp falls in prices for oil and other com­modi­ties, partly stem­ming from slow­ing growth in China.

The Lon­don-based bank has been steadily trim­ming back its global op­er­a­tions as part of a sweep­ing re­or­gan­i­sa­tion an­nounced last June in or­der to fo­cus on Asia, where it ex­pects the re­gion's grow­ing af­flu­ence to drive prof­its. Asia ac­counted for 83.5 per cent of HSBC's pre-tax prof­its last year. It's slash­ing thou­sands of jobs and sell­ing off busi­nesses in coun­tries like Brazil while ex­pand­ing in China, par­tic­u­larly the wealthy Pearl River Delta man­u­fac­tur­ing re­gion in the coun­try's south.

HSBC said that cost cut­ting mea­sures were al­ready hav­ing an im­pact and it's now a "leaner busi­ness" than it was half a year ago. How­ever, Flint said chal­lenges re­main as growth ebbs in China, where the econ­omy grew last year at its slow­est rate in a quar­ter cen­tury.

"China's slower eco­nomic growth will un­doubt­edly con­trib­ute to a bumpier fi­nan­cial en­vi­ron­ment, but it is still ex­pected to be the largest con­trib­u­tor to global growth as its econ­omy tran­si­tions to higher added value man­u­fac­tur­ing and ser­vices and be­comes more con­sumer driven," he said. Growth in China's econ­omy, the world's se­cond big­gest, dipped to 6.9 per cent last year as pol­i­cy­mak­ers sought to shift away from growth based mainly on ex­port-led man­u­fac­tur­ing and in­vest­ment to­ward greater re­liance on con­sumer de­mand. Of­fi­cials are fore­cast­ing growth of be­tween 6.5-7 per cent this year.

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