London-based bank HSBC yesterday reported that annual profit slumped following a year it said would be remembered for “unexpected economic and political events” and warned of risks this year to the global economy’s continuing recovery.
Europe’s biggest bank said net profit for last year tumbled 82 percent to US$2.5 billion from US$13.5 billion a year ago as annual revenue fell 18.5 percent to US$48 billion.
In the most recent quarter, HSBC’s net loss widened to US$4.2 billion from US$1.3 billion in the same period the previous year.
In a statement, chairman Douglas Flint said uncertainties from last year’s events “temporarily influenced investment activity and contributed to volatile financial market conditions,” although he added that HSBC’s performance was satisfactory.
While he did not mention any specifics, it was likely a reference to, among other things, Britain’s unexpected vote to leave the EU and US President Donald Trump’s election victory.
Flint said the bank recently raised its forecast for global economic growth, based on the increasing chances that the US will make changes to fiscal policy to boost the economy as well as growth in emerging markets.
“Risks to this central scenario, however, remain high,” Flint said, including the effect of rising populism on policy in upcoming European elections, the threat of global trade protection measures from Trump’s administration and uncertainty over Britain’s negotiations to leave the EU.
Flint said the bank has all the “licenses and infrastructure” it needs to continue working with customers once Britain does leave the EU. He also repeated previous projections from the bank that 1,000 staff might need to move from London to Paris over the next two years, depending on how exit negotiations go.
HSBC’s profits were partly hit by its decision to write off the remaining US$3.2 billion in its European private banking business, stemming from its 1999 purchase of Safra Republic Holdings.
The write-off accounted for part of the US$6.8 billion pre-tax loss at its European business last year.
Business at its Asian unit, meanwhile, remained fairly steady, with pretax profit dipping 12.5 percent to US$13.8 billion pre-tax, mainly because of the effect of one-time items.
HSBC is in the middle of trimming back its global operations as it carries out a sweeping reorganization to focus on faster-growing Asia, where it expects the region’s growing affluence to drive profits.
The bank said it would buy back an additional US$1 billion worth of shares in the first half of the year, following a US$2.5 billion buyback last year.
DECOUPLING? In a sign of deeper US-China technology decoupling, Apple has held initial talks about using Baidu’s generative AI technology in its iPhones, the Wall Street Journal said China has introduced guidelines to phase out US microprocessors from Intel Corp and Advanced Micro Devices Inc (AMD) from government PCs and servers, the Financial Times reported yesterday. The procurement guidance also seeks to sideline Microsoft Corp’s Windows operating system and foreign-made database software in favor of domestic options, the report said. Chinese officials have begun following the guidelines, which were unveiled in December last year, the report said. They order government agencies above the township level to include criteria requiring “safe and reliable” processors and operating systems when making purchases, the newspaper said. The US has been aiming to boost domestic semiconductor
Nvidia Corp earned its US$2.2 trillion market cap by producing artificial intelligence (AI) chips that have become the lifeblood powering the new era of generative AI developers from start-ups to Microsoft Corp, OpenAI and Google parent Alphabet Inc. Almost as important to its hardware is the company’s nearly 20 years’ worth of computer code, which helps make competition with the company nearly impossible. More than 4 million global developers rely on Nvidia’s CUDA software platform to build AI and other apps. Now a coalition of tech companies that includes Qualcomm Inc, Google and Intel Corp plans to loosen Nvidia’s chokehold by going
ENERGY IMPACT: The electricity rate hike is expected to add about NT$4 billion to TSMC’s electricity bill a year and cut its annual earnings per share by about NT$0.154 Taiwan Semiconductor Manufacturing Co (TSMC, 台積電) has left its long-term gross margin target unchanged despite the government deciding on Friday to raise electricity rates. One of the heaviest power consuming manufacturers in Taiwan, TSMC said it always respects the government’s energy policy and would continue to operate its fabs by making efforts in energy conservation. The chipmaker said it has left a long-term goal of more than 53 percent in gross margin unchanged. The Ministry of Economic Affairs concluded a power rate evaluation meeting on Friday, announcing electricity tariffs would go up by 11 percent on average to about NT$3.4518 per kilowatt-hour (kWh)
OPENING ADDRESS: The CEO is to give a speech on the future of high-performance computing and artificial intelligence at the trade show’s opening on June 3, TAITRA said Advanced Micro Devices Inc (AMD) chairperson and chief executive officer Lisa Su (蘇姿丰) is to deliver the opening keynote speech at Computex Taipei this year, the event’s organizer said in a statement yesterday. Su is to give a speech on the future of high-performance computing (HPC) in the artificial intelligence (AI) era to open Computex, one of the world’s largest computer and technology trade events, at 9:30am on June 3, the Taiwan External Trade Development Council (TAITRA) said. Su is to explore how AMD and the company’s strategic technology partners are pushing the limits of AI and HPC, from data centers to