Fri, May 05, 2017 - Page 10 News List

HSBC’s Q1 pre-tax profit falls, but boss still happy

AFP, HONG KONG

Cars create light trails near the HSBC Holdings PLC headquarters and other skyscrapers in London’s Canary Wharf on Tuesday.

Photo: Bloomberg

HSBC yesterday said that pre-tax profit fell 19 percent in the first three months of the year, but the bank’s boss described them as “a good set of results” after last year’s turbulence.

The London-based giant has been on a recovery drive over the past two years, aiming to slash costs with measures including laying off tens of thousands of staff and slimming down its business.

It blamed the drop in reported profit to US$4.96 billion on a change in accounting the fair value of its debt, while the results from a year ago included proceeds from its Brazil business, which was sold in July last year.

It also posted a 19.5 percent fall in year-on-year net profit to US$3.13 billion from US$3.89 billion.

However, adjusted pre-tax profit, which excludes one-time items, rose to US$5.94 billion from US$5.3 billion a year earlier. Analysts had forecast US$5.3 billion in a survey by Bloomberg News.

“This is a good set of results,” group chief executive Stuart Gulliver said in a statement to the Hong Kong stock exchange.

He added that the adjusted pre-tax figure was boosted by a US$1 billion share buy-back as well as progress on the cost-saving program.

Huarong International Securities (華融國際金融) analyst Jackson Wong (黃志陽) said he thought the results were positive overall.

“They cleaned up a lot of bad things in the last quarter of last year so this quarter, everything looks pretty decent, even the cost-cutting is on track,” Wong said.

The bank in 2015 announced a radical overhaul to cut 50,000 jobs and exit non-core and unprofitable businesses and focus more on Asia.

However, the firm’s profits were dealt a hammer blow last year, with executives attributing the decline to protectionist fears Donald Trump and uncertainties caused by Britain’s decision to leave the EU.

Gulliver yesterday said that this year would see the completion of strategic measures announced in 2015, including the removal of low-return risky assets.

“Our cost-saving program remains on track to hit the higher cost-saving target we announced at our annual results,” he added.

The first-quarter results were the first since the banking giant announced the appointment of a new chairman in March as part of a management overhaul that will also see it choose a new chief executive, following the massive drop in profits last year.

British businessman Mark Tucker, currently group chief executive and president of insurance group AIA, will take over from Douglas Flint in October and lead the hunt for a new chief executive to replace Gulliver, who is set to retire next year.

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