HSBC to Buy Back More Shares After Net Loss Widens--3rd Update
February 21 2017 - 8:17AM
Dow Jones News
By Margot Patrick and Joanne Chiu
HSBC Holdings PLC shares fell 6% after it reported unexpectedly
weak fourth-quarter results and said shifting attitudes toward
globalization could affect its business.
Executives at the bank said 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 HSBC's key
markets. They 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.
The stock has gained around 50% in a year, mainly on hopes that
future U.S. interest-rate rises would lift margins and revenue.
HSBC's fourth-quarter earnings fell short of analyst expectations
because of a series of one-off items, but also reflected margin
pressures in some businesses. Its net loss widened to $4.23 billion
in the three months to end-December from $1.33 billion in 2015's
fourth quarter. Full-year net profit sank to $2.48 billion from
$13.52 billion.
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
repeated its plans Tuesday to move around 1,000 jobs to Paris in
the next two years.
There was some good news for investors. 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. The bank is
among the most strongly capitalized in Europe.
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. Mr. Gulliver
said Tuesday that Mr. Flint might not depart until 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 continuing 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.
Write to Margot Patrick at margot.patrick@wsj.com and Joanne
Chiu at joanne.chiu@wsj.com
(END) Dow Jones Newswires
February 21, 2017 08:02 ET (13:02 GMT)
Copyright (c) 2017 Dow Jones & Company, Inc.
Hsbc (LSE:HSBA)
Historical Stock Chart
From Aug 2024 to Sep 2024
Hsbc (LSE:HSBA)
Historical Stock Chart
From Sep 2023 to Sep 2024