HSBC more than doubles pre-tax profit for 2017

HSBC more than doubles pre-tax profit for 2017

HSBC Holdings Plc kick-started the United Kingdom bank earnings season with the final set of results for Chief Executive Officer Stuart Gulliver as John Flint assumes the role.

The bank's shares were down in afternoon trading, falling 2.09 percent in afternoon trading at HK$81.8 ($10.5).

The pre-tax profit is a 141% improvement from 2016's earnings, which were valued at £5.08bn ($7.1bn).

Its strategy of expanding business in the Pearl River Delta, an area of southern China including major cities such as Hong Kong and Guangzhou, has boosted performance, with Asia business driving more than 75 percent of reported and adjusted profit in 2017, the bank said.

Greenwood said: "The dividend was maintained but there is no indication as to when growth may resume".

Analysts cited the lack of a reliable growth engine due to inconsistent markets and the threat of U.S. interest rate hikes as problematic for the bank, with a lack of clarity on share buybacks weighing on the stock price. The group is signalling further share buybacks will be considered when appropriate but nothing concrete in this announcement.

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The results came as new chief executive John Flint takes over from Stuart Gulliver, who steps down following seven years at the helm. Gulliver is being replaced internally by John Flint. He has dealt with the after-effects of rapid expansion that caused the bank to lose its grip on activities in Mexico, where it was used to launder money by drug gangs, and Switzerland, where it admitted aiding aggressive tax avoidance.

"As I prepare to pass on the stewardship of HSBC to my successor, I am proud of our achievements", Mr Gulliver said.

HSBC's year-ago profit figure reflected a US$3.2 billion impairment of goodwill in the global private banking business in Europe and the impact of its sale of operations in Brazil. "After the most extensive transformation programme in HSBC's 153-year history, HSBC is simpler, stronger and more secure than it was in 2011, and better able to connect customers to opportunities in the world's fastest growing regions". The firm's common equity Tier 1 ratio fell to 14.5% from 14.6% at the end of September, yet remains above its target range of 12% to 13%. Flint backed this up, telling investors on a conference call that there's been no change to the lender's policy on returning capital. "The fundamentals of HSBC will remain the same as they always have - strong funding and liquidity, strong capital, and a conservative approach to credit".

That compares with a loss of $1.9bn recorded in Europe.

Profit attributable to ordinary shareholders of the parent company climbed to $9.68 billion from $1.30 billion past year. Adjusted revenue rose 5 percent to $51.52 billion, primarily driven by higher revenue in three main global businesses.

According to the accounts, he has earned an annual bonus of £2.1m in 2017 on top of £3.9m in salary.

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