Business World

Tuesday 24 October 2017

Poor profit sees HSBC take biggest shares hit in 18 months

London's Canary Wharf business, financial and shopping district
London's Canary Wharf business, financial and shopping district

Stephen Morris

HSBC shares suffered their biggest slump in 18 months in London trading after reporting fourth-quarter profit that missed estimates on a surprise drop in revenue.

The bank said it will boost cost-cutting measures and extend a stock buyback. Adjusted pre-tax profit, which excludes one-time items, jumped 39pc to $2.62bn (€2.48bn), Europe's largest bank said.

That missed the $3.78bn (€3.58bn) average estimate of six analysts compiled by Bloomberg News. Removing the adjustments, HSBC reported a $3.4bn (€3.22bn) pre-tax loss for the fourth quarter, which it blamed on slowing growth in its core markets of Hong Kong and the UK

Ceo Stuart Gulliver is battling to reverse five years of declining revenue as he pares back HSBC's sprawling global footprint and reduces expenses.

The bank increased its cost-cutting target by $1bn to $6bn of savings, while cautioning it faces more than $3bn of revenue headwinds in 2017, including currency movements and record-low interest rates in the UK.

HSBC has lost about $20bn (€18.9bn) of revenue since Gulliver took over in 2011. "Pre-tax profit is a large miss versus consensus" with "weakness in revenues across all major line items," Citigroup's Ronit Ghose said in a note. Ghose also noted "an unusually large amount of one-offs" in the period, including a multi-billion writedown on the value of its scandal-hit European private bank.

The stock plunged as much as 6.8pc, the most since August 2015, and traded at 669.4 pence at 8:28 am in London. Still, the shares in London have surged about 47pc since the UK voted to leave the European Union on June 23, more than any other big bank. (Bloomberg)

Irish Independent

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