HSBC to Buy Back More Shares After Net Loss Widens-2nd Update
February 21 2017 - 7:36AM
Dow Jones News
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)
Copyright (c) 2017 Dow Jones & Company, Inc.
HSBC (NYSE:HSBC)
Historical Stock Chart
From Mar 2024 to Apr 2024
HSBC (NYSE:HSBC)
Historical Stock Chart
From Apr 2023 to Apr 2024