By Carla Mozee, MarketWatch
LONDON (MarketWatch) -- U.K. stocks slipped Monday, pulling back
from a record high as shares of HSBC Holdings PLC marked their
worst loss in three years following financial results from the
banking heavyweight.
The benchmark FTSE 100 ended 3 points lower at 6,912.16. It had
opened with gains, and briefly surpassed the previous all-time
closing high of 6,930.20 that was notched in December 1999.
But the FTSE 100 then felt the weight of shares of HSBC (HSBC).
Their 4.6% drop, the biggest since November 2011, came after the
company said its fiscal-year 2014 pretax profit was down 17% to
$18.68 billion. Net profit slid to $13.7 billion, from $16.2
billion a year ago, as the bank was a hit with higher costs and
provisions for misconduct
(http://www.marketwatch.com/story/hsbc-posts-fall-in-profit-2015-02-23-3485413).
"I am surprised that other U.K. bank stocks did not react to
HSBC's comments today because the trends for lower profits and
higher regulatory costs are industry wide," Louise Cooper, analyst
at Cooper City, wrote in a report Monday. " I await with interest
what Lloyds will say on Friday and RBS on Thursday when they both
report full-year results."
In the banking group Monday, Lloyds Banking Group PLC shares
rose 1.3% and Royal Bank of Scotland PLC gained 032%. Barclays PLC
picked up 0.5% but Asia-focused Standard Chartered PLC fell
4.7%.
Before HSBC's results were released, the bank in a statement
acknowledged that Chief Executive Stuart Gulliver holds a Swiss
account.
(http://www.marketwatch.com/story/hsbc-chief-hit-with-tax-avoidance-scandal-2015-02-23)
"Since being posted to the U.K. from Hong Kong in 2003, Mr.
Gulliver has paid full U.K. tax on the entirety of his world-wide
earnings, " the company said. The statement followed a report from
The Guardian newspaper that Gulliver held around GBP5 million ($7.7
million) in a Swiss account, and is domiciled in Hong Kong for tax
and legal reasons. The report comes as HSBC has been dealing with
allegations it aided clients in dodging taxes through its Swiss
unit.
"For all the recent media furor around potential conduct issues,
it is the 'underlying' performance which, we believe, should be the
greatest cause of investor concern -- right across revenues, costs
and impairments," said Investec Securities analyst Ian Gordon in a
note Monday.
HSBC Chairman Douglas Flint and officials from the HM Revenue
and Customs agency are scheduled to appear before Parliament's
Treasury Select Committee in London on Wednesday.
In other bank industry developments Monday, the U.K. government
has cut its stake in Lloyds to 23.9%
(http://www.marketwatch.com/story/uk-government-cuts-its-stake-in-lloyds-2015-02-23),
a move that raised about 500 pounds ($770 million). The government
during the 2008 financial crisis used GBP21 billion in taxpayer
funds to rescue Lloyds.
Meanwhile, Royal Bank of Scotland is set to name Howard Davies
as its next chairman, the Financial Times reported. Davies, who
once served as the head of the Financial Services Authority, will
succeed Philip Hampton in the role of chairman this summer,
according to the report.
Also pressuring the FTSE 100 were energy and mining shares, with
Antofagasta PlC down 2.8%. The copper miner cut its fiscal 2015
cash-cost forecast by 10 cents a pound to $1.50 a pound, from $1.40
a pound, citing a weaker Chilean peso and lower oil prices. The
revised forecast should help boost earnings and free cash flow,
even in a challenging environment for commodity prices, said
Jefferies analyst Chris LaFemina in a report.
"However, this cost deflation also highlights an ongoing risk in
the commodities sector as many miners benefit from FX and reduced
input costs, leading to a potential lowering and flattening of the
cost curve," LaFemina wrote.
On the upside were shares of Associated British Foods PLC . They
rose 0.7% after the ingredients maker and parent company of
retailer Primark said underlying trading remains in line with
expectations
(http://www.marketwatch.com/story/primark-parent-ab-foods-trading-in-line-with-view-2015-02-23).
It also continues to expect a marginal decline in per-share
adjusted earnings for the full year.
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