PLC reported lower-than-expected earnings in the fourth quarter as a result of financial market turmoil, US-China trade tensions and Brexit uncertainties.
The World Bank's shares fell 4% in London after cost growth exceeded revenues at the end of 2018. The bank explained that its customers withstood demand when markets became volatile. last year, which hurt the revenues of its global operations and its retail banking and wealth management businesses. It announced a net profit of $ 12.6 billion in a full year, less than the $ 13.71 billion expected by analysts. Net income for 2017 was $ 9.68 billion.
Net income in the fourth quarter was $ 1.54 billion, compared with a net loss of $ 274 million in 2017 on non-recurring expenses.
In an interview, HSBC Managing Director John Flint said the bank was on track to meet the fourth quarter's cost control goals until the collapse of revenues in some parts of the bank in November. He said that it was "actually a fourth quarter problem" and that the bank had started the year 2019 in a "fundamentally different" position. One way to avoid a repetition, he said, will be to delay or stagger planned investments over the next year.
Flint, who is in his first year as CEO, did not report any change in the updated strategy regarding HSBC's focus on growth in Asia. He added that the trade dispute between the US and China had had no effect on the credit quality of customers, but had led to a decline in loan demand. HSBC President Mark Tucker said Tuesday that disputes between the United States and China would likely continue to "brighten the climate" this year. HSBC is one of the largest foreign trade finance banks in the world in terms of revenues and losses as a result of supply chain disruptions and commercial activity.
The bank adjusted provisions for potential credit losses related to trade and tariff tensions and charged a charge of $ 165 million in the fourth quarter to reflect the growing level of economic uncertainty in the UK around its departure expected from the European Union. Last year, its total Brexit provision was increased to $ 410 million. The charges were calculated taking into account the possible economic scenarios of Britain's exit from the EU, HSBC said.
Flint said the bank was ready for Brexit, but uncertainty over exit conditions has led some companies to delay their investments and "customers are desperate for certainty".
The annual business turnover of the bank is set at 53.78 billion USD, up from 51.4 billion USD in 2017. The fourth quarter business figure has increased overall at HSBC, but some units posted double-digit declines.
Its global market operations generated sales of $ 1.1 billion in the last three months of the year, down from $ 1.34 billion in the fourth quarter of 2017.
In the United States, Flint said the bank's turnaround was still underway and that it had "a long way to go" to achieve a 6% return on equity target. By 2020. This figure was 2.7%. in 2018. HSBC has approximately 1.3 million retail banking and wealth management clients in the United States, concentrated primarily on the east and west coasts, as well as commercial banking and banking activities. investment in the country.
Also on Tuesday, HSBC said the European Commission had asked for information on a possible coordination in the trading of currency options. He said the issue is at an early stage.
-Chester Yung contributed to this article.
Write to Margot Patrick at [email protected]