HONG KONG: Banking giant HSBC said on Tuesday that pre-tax profit rose last year but it suffered a bruising final quarter as worries over the global economy and the US-China trade war began to bite.
The London-headquartered behemoth told investors it was still aiming to meet targets despite the looming twin storms of Brexit and the long-running trade impasse between Washington and Beijing.
But analysts warned it remained vulnerable to any fallout from either issue becoming a full-blown crisis in the year ahead.
Overall the year saw strong growth for HSBC with profits before tax up 16 per cent at $19.9 billion, net profit ballooning 30 per cent to $12.6 billion and adjusted pre-tax profit rising three per cent to $21.7 billion.
The results capped the first full year at the helm for chief executive officer John Flint, who has vowed growth while keeping a lid on costs.
But the yearly growth figures were dampened by a tough final quarter when the markets — especially those in Hong Kong and China — went into meltdown over global trade fears.
Adjusted pre-tax profit fell one per cent to $3.39 billion in October-December, missing the $4.4 billion consensus average by Bloomberg News derived from estimates compiled by the bank.
Global markets adjusted revenue slipped $202 million to $1.1 billion over the same period, while wealth management dropped 18 per cent, also to $1.1 billion in what the bank said was a “challenging external environment in the fourth quarter.’’
Analyst Dickie Wong from Kingston Securities said the bank missed estimates towards the end of the year partly because China and Hong Kong are its “most relied (on) market”.
“The slowing down of the economy, the trade war between China and the US also remain an uncertainty. That’s why it missed estimates,” he said.
Jackson Wong, of Huarong International Securities, said revenues were also a little underwhelming.
“One of the key things I see is their revenue didn’t grow as much as they were expecting, so that their cost efficiency is not improved as expected,” he said.
The firm’s Hong Kong-listed shares were down 1.6 per cent in afternoon trade. In a statement attached to Tuesday’s earnings, the bank’s leadership said they were prepared to weather fallout from any failure of the trade talks and Britain’s impending departure from the EU.
“The fundamentals for growth in Asia remain strong in spite of a softer regional economic outlook,” chairman Mark Tucker said in a statement attached to the annual report.— Reuters
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