By Margot Patrick and Joanne Chiu 

HSBC Holdings PLC said it would return more cash in a stock buyback despite weak fourth-quarter results that sent its stock down 6%.

Investors reset their expectations for the Asia-focused lender as it warned that a changed U.S. stance on global trade, the rise of populism in Europe and Britain's planned exit from the European Union have added uncertainty in its key markets. The stock has gained around 50% in a year, mainly on expectations that future U.S. interest-rate rises would lift margins and revenue.

Chief Executive Stuart Gulliver said political change could shift global trade into regional blocs, while predicting London will remain the "dominant financial center" in the region even after some business relocates to the EU because of Brexit.

HSBC said it would buy back as much as $1 billion in shares, adding to $2.5 billion bought back last year, and left the door open for further buybacks as capital is freed up at its U.S. business this year. It gave a mixed outlook for 2017, saying rising rates will help it in the medium term but that revenues in the U.K. and emerging markets are being dented by a strong dollar.

HSBC reported a $4.23 billion net loss in the three months to end-December, wider than last year's $1.33 billion in the same period. Revenue declined 24% to $8.98 billion. Full-year net profit was $2.48 billion, down from $13.52 billion in 2015.

The results included a $3.2 billion, full write-down of goodwill in its slimmed-down private bank in Europe, the remnants of its 1999 purchase of Safra Republic Holdings. The effect of currency translations shaved $3 billion from full-year revenue, down $11.8 billion on the year at $48 billion.

HSBC has undergone a major restructuring since 2011 under the leadership of Mr. Gulliver and Mr. Flint, exiting from most of Latin America and placing more focus on Asia. Mr. Flint is set to step down after a replacement is announced this year, and then the new chairman will seek a successor to Mr. Gulliver. There was no update on that plan Tuesday.

HSBC has undergone a major restructuring since 2011 under the leadership of Mr. Gulliver and Chairman Douglas Flint, exiting from most of Latin America and placing more focus on Asia. Mr. Flint is set to step down after a replacement is announced this year, and then the new chairman will seek a successor to Mr. Gulliver. Mr. Gulliver on Tuesday said Mr. Flint's departure could slip into 2018.

HSBC's struggles to get on top of its financial crime fighting systems continued. It spent $1.6 billion on implementing "global standards"--anti-money laundering systems and controls used across the bank--but the monitor overseeing its compliance with a 2012 U.S. legal settlement found ongoing deficiencies.

HSBC agreed to pay $1.9 billion in 2012 to settle allegations by the U.S. Justice Department that it failed to catch money laundering and violated sanctions. The bank admitted to the failings and entered a five-year deferred prosecution agreement.

Mr. Gulliver said the monitor identified some potential failings in its U.K. anti-money-laundering controls at the end of 2016, causing the U.K. financial regulator to order a fresh review.

The global banking major's full-year net profit was $1.30 billion, down sharply from net profit of $12.6 billion in the previous year. Full-year revenue fell more than 19% to $47.97 billion.

Write to Margot Patrick at margot.patrick@wsj.com and Joanne Chiu at joanne.chiu@wsj.com

 

(END) Dow Jones Newswires

February 21, 2017 07:21 ET (12:21 GMT)

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