China turmoil wipes £5.8billion off HSBC
NERVY investors wiped £5.8bn off the market value of HSBC as it said revenues had collapsed at the end of last year amid market turmoil.
The bank’s shares suffered their biggest one-day fall in two years following the warning by chief executive John Flint.
HSBC posted a rise in profits and revenues for 2018 but analysts expected better and said the figures were concerning.
Flint blamed problems at the end of last year on turbulent markets, at a time of sharp falls in stocks around the world.
He said: ‘I was disappointed as well. Revenue collapsed in the last few weeks of the year.’
Flint is overseeing a pivot to Asia by HSBC, which has a long history in China and started out as the Hong Kong and Shanghai Banking Corporation.
HSBC shares fell by 4pc, or 26.6p, to 637.1p after revenue rose 4.5pc to £41.2bn in 2018, while profits rose 15.9pc at £15.2bn.
It is paying an annual dividend of $0.51 per share, the same as in 2017. The bank already earns almost 90pc of its profits in the Far East. However, there are concerns for the Chinese economy due to trade restrictions imposed by US President Donald Trump and fears of reckless lending by the financial system.
Investec banking expert Ian Gordon said: ‘HSBC has reported an ugly set of numbers.’
Steve Clayton, at Hargreaves Lansdown, said: ‘ HSBC has always been built around facilitating international trade between Asia and the rest of the world. Today’s tariff spats between the US and China are hardly helpful and could begin to hurt the group’s customers in Asia and beyond.’
The trade war is not yet having a major impact on HSBC, Flint said. It also set aside an extra £126m to guard against the loans going sour in Britain due to the economic impact of Brexit.
The lender is still facing probes for alleged wrongdoing during the financial crisis, over everything from tax-dodging schemes to claims it rigged precious metal markets to boost profits.
Tax claims alone could cost it as much as £613m, the bank said.
HSBC chairman Mark Tucker said: ‘HSBC is in a strong position. Our performance in 2018 demonstrated the underlying health of the business. Despite a challenging external environment in the fourth quarter, all of our global businesses delivered increased profits.’
There are rising fears for China where economic growth fell to a 28-year low of 6.6pc in 2018, although this is far higher than in Western countries.
There are also concerns that it has been on a long debt spree. Last week, Bank of England governor Mark Carney said: ‘China is the one major economy in which all major financial imbalances have materially worsened.’