HSBC's 141% rise in profits fails to impress analysts


Despite the huge improvement from last 2016's earnings - the year which saw HSBC sell its Brazil branch - last year's profit still did not match the £13.52bn ($18.9bn) recorded in 2015. Pre tax profit of $21 billion was $2.1 billion or 11 percent higher.

However, the figure was still below analyst expectations of closer to $20 billion, although investors will draw some comfort from the fact the financial giant has maintained its dividend at $0.51 per share, at a cost of $10.2 billion.

The lender said pre-tax profits rose to 17.2 billion U.S. dollars (£12.3 billion) in the year to December 31, marking a whopping 141% jump compared to 7.1 billion dollars (£5.1 billion) a year earlier. That's beating an estimated $19.67 billion by Reuters and reversing the decline seen one year ago in 2016. The annual dividend was unchanged at 51 cents a share. Shore Capital analyst Gary Greenwood said the results were disappointing because profit was slightly weaker than expected and there was little news about returning cash to shareholders. "All mildly disappointing, which is not good given the lofty rating it is trading on".

Mr Flint, HSBC's former head of retail banking and wealth management, has said he wants to speed up the pace of change at the firm.

It was the last earnings under Gulliver, who led the bank's overhaul, which included cutting thousands of jobs, bringing in new leadership and selling off businesses across the globe to focus on emerging markets in Asia. 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.

Stuart Gulliver, instrumental in turning around HSBC, will step down as the bank's chief executive after Tuesday.

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"HSBC is simpler, stronger, and more secure than it was in 2011".

The lender said it was planning additional tier 1 capital issuance of between US$5 billion and US$7 billion during the first half, and that it would undertake share buybacks "as and when appropriate".

HSBC's common-equity tier 1 ratio, a key measure of financial strength, was 14.5 per cent in 2017, compared to 13.6 per cent past year and 11.9 per cent in 2015.

"These results and the achievements of the past couple of years give us a great platform to build on", Mr Flint said, commenting on Tuesday's results.

His replacement, chief designate John Flint, says: "The fundamentals of HSBC will remain the same as they always have - strong funding and liquidity, strong capital, and a conservative approach to credit". Adjusted operating costs rose 4% to $31.1bn, driven by investment in growth programmes and higher performance-related pay.

HSBC's fortune turned around in 2017 with an increase in the year's profit.