HSBC pre-tax profit slides but hails ‘good result’

AFP: HSBC said yesterday that pre-tax profit fell 19 percent in the first three months of the year but the bank’s chief described them as “a good set of results” after a turbulent 2016.
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 2016.
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 programme.
Hong Kong-listed shares in the firm were up 1.71 percent at HK $ 65.55 in 
afternoon trade.
Analyst Jackson Wong 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,” said Wong of Huarong International Securities.
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.
But the firm’s profits were dealt a hammer blow last year, with executives attributing the decline to protectionist fears under Donald Trump and uncertainties caused by Britain’s decision to leave the 
European Union.
Gulliver said yesterday that 2017 would see the completion of strategic measures announced in 2015, including the removal of low-return risky assets.
“Our cost-saving programme 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 2016 profits.
British businessman Mark Tucker, currently Group Chief Executive and President of insurance group AIA, will take over from Douglas Flint in October.
He will lead the hunt for a new CEO to replace Gulliver who is set to retire in 2018.
Gulliver and Flint were grilled by British lawmakers in 2015 and apologised for “unacceptable” failings at HSBC’s Swiss division following allegations the unit helped rich clients hide billions of dollars from 
the taxman.
HSBC was one of six major US and European banks that were fined a total of US $ 4.2 billion by global regulators in a November 2014 crackdown for attempted manipulation of the foreign 
exchange market.
It was also fined US $ 1.92 billion by US prosecutors in 2012 to settle allegations that it failed to enforce anti-money laundering rules exposing it to exploitation by drug cartels and terrorist organisations.