Rocky start for Flint at HSBC as profit dip spoils £2bn share plan
JOHN FLINT’S reign at banking giant HSBC got off to a difficult start as a surprise dip in profits and $900m (£664m) of provisions to cover past misdeeds overshadowed plans for $2bn worth of share buybacks announced yesterday.
Mr Flint’s first quarterly update as chief executive revealed 6pc growth in revenues to $13.7bn in the three months to March as customers poured more cash into its retail banking and wealth management divisions.
But pre-tax profits dropped 4pc to
‘We’re in a better situation now, the outlook for revenues is healthier than it’s been for a while’
$4.8bn on the back of a 13pc surge in operating expenses as HSBC invested in expanding its business, sending its shares down 1pc to close at 714.4p yesterday.
Mr Flint, who took over from Stuart Gulliver in February, is tasked with finding new avenues of growth for HSBC after years of declining revenues. Under Mr Gulliver, HSBC sold off divisions and cut thousands of jobs in an attempt to reduce costs. It also faced a number of banking scandals.
Mr Flint, an HSBC lifer, said he was confident the bank’s “jaws”, an industry measure of revenue growth versus cost growth, would be positive when measured across the whole of the year.
He said: “We’re in a better environment now, the outlook for revenues is healthier than it’s been for a while, largely underpinned by interest rates, which create the most sustainable kind of revenue that we generate.” And he added: “As we think about getting HSBC growing again, we are investing in the opportunities that we see.”
Markets earmarked for growth include UK mortgages, where it has been expanding its coverage by thirdparty brokers, and commercial banking in Hong Kong and mainland China, for which it has been hiring more relationship managers.
HSBC has been shifting its operations towards Asia for several years to take advantage of stronger economic growth in the region.
Mr Flint is aiming to set out his growth plans in more detail either before or at the time the bank reveals its half-year financial figures in August.
The share buyback announced alongside the results follows a $2bn buyback in August 2017 and $1bn the previous February, but HSBC said the round announced yesterday would be the only one this year.
The bank also set aside $897m to cover potential legal claims in relation to an investigation by the US Department of Justice into the mis-selling of mortgage securities.
HSBC has been forced to pay out billions of dollars worth of fines in recent years for scandals including failing to stop Mexican drug cartels from money laundering, violating sanctions against Iran and manipulating foreign exchange markets.
Mr Flint’s appointment was announced in October, just weeks after former Prudential boss Mark Tucker took over as chairman.