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HSBC's profits lack the analysts' expectations

HSBC Holdings

HSBC -2.99%

PLC reported lower-than-expected fourth-quarter profits as chopped financial markets, US-China trading tensions and Brexit uncertainty weighed on it.

World Bank shares fell 4% in London trading after the bank said cost inflation exceeded revenues by the end of 2018. The bank said its customers kept on doing business as markets became volatile last year, beating revenues in their global business and corporate markets. retail and banking. It reported an annual profit of $ 1[ads1]2.6 billion, less than analysts of $ 13.7 billion. The net result for 2017 was $ 9.68 billion.

Net income in the fourth quarter was $ 1.54 billion compared to a net loss of $ 274 million in 2017 on one-off costs.

John Flint's CEO in an interview said the bank had been on the right track to meet fourth-quarter cost control targets until revenues collapsed in parts of the bank in November. He said it was "very much the fourth quarter problem" and that the bank started in 2019 in a "fundamentally different" position. One way to avoid a recurrence, he said, would be to delay or cut planned investments in the coming year.

Herr. Flint marks its first year as CEO and did not signal any shifts in a strategy update on HSBC's focus on Asia for growth. He said the trade conflict between the US and China had no effect on the customer's credit quality, but had resulted in weaker loan demand. HSBC chairman Mark Tucker on Tuesday said differences between the US and China are likely to continue to "inform sentiment" this year. HSBC is one of the world's largest trading finance banks by revenue and is losing out of supply chain disruptions and business track trading.

The bank said it adjusted the provision for potential loan losses and tax-related losses and took an amount of $ 165 million in the fourth quarter to reflect the increased level of financial uncertainty in the UK around planned European Union departure. It brought its total Brexit-related provision last year to $ 410 million. The fees were calculated by assessing possible economic scenarios from the UK's EU exit, HSBC said.

Herr. Flint said the bank is prepared for Brexit, but that the uncertainty surrounding the terms of the exit has led some companies to delay the investment and "customers are desperate for security."

Total revenues in the bank were NOK 53.78 billion, up from USD 51.4 billion in 2017. Revenues for the fourth quarter increased overall on HSBC, but some units posted a double-digit decline.

The global market operation recorded $ 1.1 billion of revenue in the last three months of the year, down from $ 1.34 billion in the fourth quarter of 2017.

In the United States, Mr. Flint says the banks' conversion is still an ongoing work, and that it is "far away" to reach a target of 6% return on the stock market by 2020. The figure was 2.7% in 2018. HSBC has about 1.3 million banks and value creation customers in the United States, clustered mainly on east and west coast, as well as commercial and investment banking in the country.

On Tuesday, HSBC also said that the EU Commission has requested information on potential co-ordination in the foreign exchange market. It said the case is at an early stage.

Write to Margot Patrick at

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