HSBC sees 62% fall in profits and share price slump

Melba UnderwoodFeb 22, 2017

Profit previous year was much lower than expected, down 62 percent due to costs from restructuring and the writedown of the value of its private banking activity in Europe.

Stuart Gulliver, chief executive of HSBC, said: "Our monitor has raised certain concerns but we have continued to progress and our commitment remains unwavering".

LONDON/MILAN, Feb 21 (Reuters) - European shares rose to their highest in over 14 months on Tuesday, with optimism generated by encouraging manufacturing surveys outpacing a steep decline in HSBC shares after a slump in the heavyweight bank's annual pre-tax profit.

This means that full-year pre-tax profits come in at $7.11bn, compared with $18.9bn from a year earlier.

HSBC also warned its revenues could fall again in 2017 with uncertainty over Brexit and Donald Trump's economic policies.

The bank, Europe's largest, attributed the collapse to a series of one-off charges it had incurred, such as the sale of its Brazil operations.

Mr Flint and Mr Gulliver have toiled since taking over HSBC in 2010 to shrink it, exiting more than 80 businesses and shedding over 43,000 jobs as the post-2008 financial crisis environment proved harsh for global mega banks.

Royal Banking Group is expected to report an eye-watering loss of £6.1bn as it sets aside a further $3.8bn for expected fines from U.S. authorities over the way it packaged up and sold mortgages nearly a decade ago.

Chairman Douglas Flint said "These foreshadowed changes to the established geopolitical and economic relationships that have defined interactions within developed economies and between them and the rest of the world".

HSBC said that it was being investigated by the Financial Conduct Authority over its financial crime controls.

Britain's FTSE 100 index .FTSE, dominated by several global banks, underperformed.

Shares of HSBC Holdings Plc (HSBC,HSBA.L) declined around 4 percent in Hong Kong trading after the Asia-focused lender reported wider net loss in its fourth quarter amid weak net interest income.

As if that was not enough the bank has also received requests for information from various regulatory and law enforcement authorities around the world concerning persons and entities believed to be linked to Mossack Fonseca & Co., which the bank says could be significant.

While HSBC will maintain its European headquarters in London despite Brexit, planning indicates at least 1,000 roles would leave London for Paris in the lead up to British secession.

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