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HSBC's year-over-year results did not live up to expectations after the "fall" in revenues in the last weeks of 2018, amid a slowdown in China, uncertainties over the year. global trade and fears that Britain is disengaging from the EU.
The results of the year were the first to be presented by John Flint, CEO of HSBC, who took the helm in February 2018 with the commitment to support the bank's growth by accelerating its "pivot to Asia" .
HSBC has certainly increased its profits and revenues last year, although its performance did not live up to badysts' expectations. The bank reported pre – tax profit of $ 19.9 billion for the year, up about 16% from 2017, but lower than the $ 21.3 billion estimate. dollars established by consensus, according to Refinitiv.
Reported revenues were $ 53.8 billion, up 5% from the previous year, but below consensus estimates of $ 54.7 billion.
HSBC shares listed in Hong Kong fell 2.7% after the earnings release, before falling by around 1.7%. The stock has increased by almost 3% since the beginning of the year.
Flint has been banking on HSBC's future on Asia's fast-growing economies, where the bank is making nearly 90 percent of its profits, although loan figures for the fourth quarter of 2018 indicate a slowdown in growth. growth.
Loans and advances to Asian customers grew 5.5% year-over-year in the last three months of the year, reflecting a sharp slowdown compared to two-year gains. figures recorded in 2017.
"Growth rates are certainly lower in the balance sheet; we are seeing a softening on the badet side, "Flint said during an interview with the FT. "Given the trade uncertainty, it's not surprising, but we are actually seeing a reduction in the growth rate."
As one of the world's largest trade finance institutions, badysts and investors are concerned that the trade dispute between China and the United States is hurting HSBC, although Flint said the bank had not yet felt a significant impact.
However, he warned that an increase in US tariffs on $ 200 billion of Chinese imports – from 10% currently to 25% – could result in significant disruption.
"Obviously, tariffs of 25% – if we got there – it would be a different order of magnitude and it could really start disrupting supply chains," Flint said.
HSBC's inability to grow while controlling costs has become a persistent concern for investors, and the bank has missed its revenue growth target faster than spending. Its adjusted 'jaw ratio' for 2018 – which measures revenue growth relative to costs – stood at 1.2%, a figure that may disappoint investors.
"I've also been disappointed," Flint said, attributing this poor fourth-quarter performance. "Revenues have plummeted in the last weeks of the year and you have no [cost] levers to shoot in the last weeks of the year. "
He said expect a return to positive jaws in the first quarter of this year.
HSBC also announced expected credit losses higher than badysts' expectations, mainly due to a charge of $ 165 million in the UK, which the bank absorbed due to economic uncertainty caused by the Brexit.
Flint, former global head of retail banking at the bank, succeeded Stuart Gulliver, who led the bank for several tumultuous years, dealing with money laundering and tax evasion cases while missing its growth objectives.
Some problems inherited from HSBC continue to haunt Flint. The penalties estimated by the bank for tax related issues would be at least $ 800 million. He also indicated that he could be the subject of additional actions related to the historical investigations of foreign exchange operations.
Return on equity, a key measure of profitability, was 8.6% in 2018, which is close to the expectations of some badysts. The bank wants to achieve a 10% return – a goal it reiterated on Tuesday – but many badysts believe that it will be difficult to achieve this goal in the short and medium term.
The bank's annual dividend remained unchanged from the previous year at $ 0.51 per share.
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